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The Importance of Letters of Intent

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One of the purposes of a Trust is to provide a structure for the distribution of assets after the lifetime of the creator of the Trust (the Grantor of the Trust) to the beneficiaries of the Trust who are designated to receive the Trust assets after the Grantor passes away.

In some cases, Trust assets are distributed outright to beneficiaries, meaning the Trustee has no discretion over when or if the beneficiaries receive the Trust assets. As soon as debts and taxes are paid, and the Trust assets are distributed from the Trust to the beneficiaries and the Trust terminates.

However, in many cases, Trusts are created for the purpose of providing oversight and management of the Trust assets for beneficiaries following the Grantor’s death. This may be done because the beneficiaries are minor children. In such cases, the Trustee will use the money for the children to ensure their living expenses are covered, their education is paid for, and the beneficiaries have a chance to mature before they are given control of inherited assets. Or it may be that a beneficiary is not good at managing money, is in a difficult marriage, has spendthrift tendencies or a gambling habit. In such cases, the Trust is created to protect the inherited assets. Control of the Trust assets will remain with the Trustee who will apply the Trust resources for the beneficiary as the Trustee determines to be prudent. Or it may be that the beneficiary has special needs or is disabled in some way, and the Trust assets are there to provide for the beneficiary’s needs in ways that will not disqualify the beneficiary from receiving or being eligible to receive needs-based public benefits.

In all of these circumstances, it is the job of the attorney drafting the Trust to communicate the Grantor’s intent while at the same time making sure that the Trust instructions are flexible enough to allow the Trustee to respond to changed circumstances or unanticipated events that arise following the Grantor’s death. Because of the need for flexibility, mandating specific directions in the Trust document can be unwise, both because they may tie the Trustee’s hands, and also because they may become inappropriate as the beneficiary ages or circumstances change.

On the other hand, the intent of the Grantor of a Trust is extremely important, as it is that intent that should inform the Trustee’s decision-making from how the Trust assets are managed to how the Trustee exercises discretion for the benefit of the Trust beneficiaries.

Enter the letter of intent – an excellent tool that a Grantor can use to spell out his intent and provide guidance to the Trustee without memorializing these intentions in the Trust document. Think of a letter of intent as the Grantor’s private instructions to the Trustee. A letter of intent should be written by the Grantor in the Grantor’s own words. In it, the Grantor should state the reasons for creating the Trust, tell the Trustee about the beneficiaries, and express the Grantor’s wishes for the way the Trustee should use the Trust resources to help the beneficiary.

For example, the Grantor of a Trust that is intended to manage assets for the Grantor’s minor children may express his wish that his children attend private secondary school and that tuition be paid for by the Trustee, that his children be allowed to travel to visit relatives abroad, or be encouraged to study abroad in college, or that his daughter’s love of horseback riding or his son’s passion for the saxophone be fostered and encouraged.

If the Trust is for the benefit of a beneficiary with special needs, the Grantor may want to express wishes regarding the child’s need for specific therapies or enjoyment of certain experiences – for example a yearly trip to Disney World. A letter of intent can also set out a parent’s vision for their child’s future – for example, wanting the child to be able to live independently with a companion, or in a group home setting.

The beauty of a letter of intent is that it can be changed as often as necessary, to keep pace with the Grantor’s changing desires for the beneficiaries without the need to update the Trust document. This can be especially useful where the intended beneficiaries of the Trust are young, and their needs and interests, and the Grantor’s goals for them may change from year to year – for example, if a child’s passion for the saxophone this year turns into a passion for the trumpet, or soccer, or chess next year.

The letter of intent need not be perfect or all encompassing, and as time passes, may no longer be relevant. For example, if the Grantor dies while beneficiaries are young, the Grantor’s intent as expressed in that letter will be frozen in time. However, a Trustee will be able to take some useful guidance from the letter that can be applied as the beneficiaries age.

As a Grantor, writing a letter of intent is not an easy exercise, or one that should be done in haste. However, done thoughtfully and mindful of the fact that it is to be used as a roadmap of your intentions for the people you intend to benefit with the assets you leave behind, it can be a very fulfilling exercise. If the letter is modified as time goes on and circumstances change, you have an opportunity to leave the best possible evidence of your intentions for those you have entrusted with carrying out those intentions after your lifetime.

If you have questions about creating your own letter of intent, please contact our office. We will be happy to assist you.

5 Types of Trusts – How to know which Trust is Right for You

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We include a column in our law firm’s quarterly newsletter called ‘Ask SSB’ in which we answer questions posed by readers. Recently, a reader asked about the different types of trusts and which one was right for her.  As with most estate planning questions, the answer to, ‘what’s best for me?’ is, ‘it depends.’   

There are far more than 5 types of trusts and each type of trust is intended to accomplish different goals.  Read on to learn about 5 types of commonly used trusts. 

  1. Revocable Living Trust.  A Revocable Living Trust is one of the most common estate planning tools.  Reasons for using a Revocable Living Trust include probate avoidance and providing management of assets for beneficiaries (such as young children) who are not yet mature enough to manage assets for themselves or for whom an inheritance should be protected from ‘creditors or predators.’  The basic “players” in any trust are the Grantor (sometimes called the Settlor or Donor), the Trustee and the beneficiary.  The Grantor is the person (or persons in the case of a married couple) who creates the Trust.  The Trustee is the person (or persons) who is in charge of managing the trust assets, and the beneficiary is the person (or persons) who is entitled to receive distributions from the trust.  In a Revocable Living Trust, these three roles are often the same person while the Grantor is alive.  For example, if I create a Revocable Living Trust, I am the Grantor.  I will name myself as the Trustee of the trust and I will also be entitled to receive distributions from the trust.  After the Grantor’s death, a successor Trustee will take over management of the trust assets for the benefit of the successor beneficiaries named by the Grantor to benefit from the Trust assets after the Grantor’s death.

  2. Testamentary Trust.   A Testamentary Trust is a trust created under a Will.  A testamentary trust comes into existence only when the testator (person who created the Will), dies and the Will is probated.  A Testamentary Trust cannot be used to avoid probate. In fact, a Testamentary Trust requires that any assets allocated to it to be subject to the ongoing jurisdiction of the Probate Court.  The primary reason for incorporating a Testamentary Trust into a Will is for long-term care planning purposes.  There is a federal regulation that provides that assets funded into a trust via a Will are not deemed to be countable assets in determining whether the surviving spouse of the testator is eligible for Medicaid (MassHealth) benefits to pay for long-term care. Testamentary trust planning is often used for married couples where one person is at heightened risk of needing long-term care.

  3. Supplemental Needs Trust.    A Supplemental Needs Trust is commonly used to preserve needs-based governmental benefits for a person with disabilities. Many benefit programs have an asset limit of $2,000 for eligibility.  If someone who receives Supplemental Security Income (SSI), for example, were to receive an inheritance of more than $2,000, they would lose the SSI benefit until the amount in excess of $2,000 is spent down in an allowable manner.  Giving the assets away is not an allowable spend down. Transferring excess assets to a first-party Supplemental Needs Trust is an allowable spend down.  The downside to this type of Supplemental Needs Trust is that it must provide that Medicaid benefits received by the beneficiary during his lifetime be ‘paid back’ to the state at the beneficiary’s death.  With respect to a future inheritance this problem is easily avoided by the creation of a third-party Supplemental Needs Trust.  This is a trust created by someone other than the beneficiary.  For example, parents of a child with disabilities, can create a third-party trust for the benefit of their child into which the child’s inheritance would be paid at the parents’ deaths.   A third-party Supplemental Needs Trust does not need to include a payback provision, and assets in the Trust will not cause the beneficiary to lose needs-based governmental benefits.  Assets remaining in the trust at the death of the disabled beneficiary may be distributed to other family members.

  4. Irrevocable Income Only Trust.  An Irrevocable Income Only Trust is often used to preserve assets from having to be spent on future long-term care costs.  Given the very high cost of long-term care, many people worry that if they have the misfortune to end up in a nursing home all of their assets will be spent on the cost of their care and they will not be able to preserve any assets for their children.  The way this type of trust works is that the Grantor of the trust transfers assets (a house or an investment account, for example) to the trust.  The terms of the trust permit only income to be distributed out of the trust to the Grantor during his or her lifetime.  The trust must prohibit the distribution of any principal to the Grantor.  That means, the grantor cannot receive the transferred assets back.  There is a 5-year ineligibility period for long-term care Medicaid benefits following the transfer of assets to this type of trust.   After the 5-year period, the assets in the trust are not deemed to be ‘countable’ for purposes of determining the Grantor’s eligibility for Medicaid benefits to pay for nursing home care costs.  Be aware that this is easier said than done, as MassHealth, the agency that administers the Medicaid program in Massachusetts, does not view such trusts favorably and looks hard to find ways to invalidate them.

  5. Irrevocable Life Insurance Trust.  In addition to long term care planning, irrevocable trusts are created to reduce estate taxes.  There are many types of irrevocable trusts used for estate tax planning: Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trust (QPRTs), Gift Trusts, and Charitable Trusts, to name a few. An Irrevocable Life Insurance Trust (ILIT) is used to remove life insurance from the insured’s taxable estate.  Although life insurance is not income taxable, it is a taxable asset for estate tax purposes.  While this is less of an issue than it used to be under our former federal estate tax laws (our current federal estate tax law means that only the very wealthiest estates are subject to federal estate tax), estate tax is still an issue for people who live in states like Massachusetts which has its own estate tax system. In Massachusetts, estates in excess of $1 million are subject to estate tax.  If someone has assets such as a house, a 401K plan, bank accounts and investments totaling less than $1 million when they pass away, there will not be any Massachusetts estate tax.  However, if that person also has a $1 million life insurance policy, then their taxable estate is $2 million and there will be estate tax due to the Commonwealth of $100,000.   If the life insurance policy was owned by an Irrevocable Life Insurance Trust, then it would not be included in the taxable estate and the estate tax liability would be eliminated.

The best way to determine the Trust that is best for you and your situation is to consult with an experienced estate planning attorney.  If we can help you with that planning, please contact us. 

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.

January, 2021

© 2021 Samuel, Sayward & Baler LLC

What Happens After the Death of a Person Who Received Medicaid Benefits?

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Medicaid, also known as MassHealth, is the joint federal and state program that provides public benefits to pay for the care of individuals who are medically and financially eligible because they do not have sufficient assets to cover the costs themselves.  If the individual was age 55 years or older and received MassHealth benefits during his or her lifetime, the MassHealth Estate Recovery Unit (“ERU”) is responsible for collecting reimbursement for the costs paid by the Commonwealth.  Reimbursement comes from the deceased person’s probate estate. Under Massachusetts law, the ERU must be notified when probate pleadings are filed with the probate court. Thereafter, the ERU files a claim against the probate estate to reserve the right to be paid from the estate. As the recipient’s house is typically the largest asset remaining to be probated, the ERU is often reimbursed from its sale proceeds.

A recent decision by the Supreme Judicial Court of the Commonwealth of Massachusetts highlights the importance of understanding what happens when a person who has received Medicaid benefits during his or her lifetime passes away.  In the Estate of Jaqueline Ann Kendall (SJC-12881, December 28, 2020), the Supreme Judicial Court held that the Commonwealth was not entitled to reimbursement from Ms. Kendall’s probate estate (consisting of 50% ownership of a house) because the ERU waited too long to file its claim.  While it may seem that the decision favors procrastination for families whose loved ones were MassHealth recipients, this is not necessarily the case. The ERU is permitted under the law to file probate pleadings if no one else steps forward, and may become more aggressive in doing so following the Kendall case.  

A better strategy for protecting your assets from nursing home costs is to be proactive and undertake long-term care planning.  This may mean conveying property subject to a retained life estate, or crafting a so-called “Medicaid Trust” or “Irrevocable Income Only Trust”, or other options that best fit your needs and goals.   

At Samuel, Sayward & Baler LLC, an elder care attorney knowledgeable in long-term care planning will guide you through the advantages and disadvantages of your long-term care planning options. Our estate planning attorneys can help you to avoid probating your house and the subsequent MassHealth claim, and preserve its value for the benefit of your children, in the event you require MassHealth benefits during your lifetime.

Attorney Abigail V. Poole is an associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of trust and estate planning, estate settlement and elder law matters. She is an active member and current Vice 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. 

January, 2021

© 2021 Samuel, Sayward & Baler LLC

 

Smart Counsel Series College Solutions Webinar Preview (Jan 21st 6PM)

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To our Clients and Friends:

Do you have children that are planning to go to college in the next year or two? Do you want to help your child find the best college for them? Are you worried about having everything in place for them when they leave home for the first time? If you answer yes to any of these questions, then please join us for the next Zoom webinar in our Smart Counsel Series on Thursday, January 21, 2021, from 6:00 pm to 7:30 pm, to learn how to find the right fit in a college for your child.

Larry Dannenberg, founder of College Solutions, along with his colleague Aaron Ladd, Managing Director for the Northeast, will discuss how to identify the ideal college from an academic, social and financial perspective — not only for students who are at the top of their class, but also for students who are in the mainstream academically, have learning disabilities, or may possess special athletic skills. Significant changes have occurred in the college admission process in the last year due to the Coronavirus (COVID-19) pandemic. Standardized testing has shifted, timing for financial aid has accelerated, and researching and visiting colleges has become very complicated. Join us to learn why starting the process early can offer significant advantages.

Additionally, Attorney Abigail Poole of Samuel, Sayward & Baler, LLC will discuss the importance of having your child execute a health care proxy, power of attorney and HIPAA Authorization upon reaching the age of 18. This has always an important measure for your child to have in place, but it has become far more critical since the onset of the Coronavirus.

Contact Lynne Abe at 781/461-1020 or abe@ssbllc.com to reserve a spot for you and a friend. (Please forward this message to a friend or family member if they have children who plan to attend college.)

The program is free but space is limited so don’t delay!

Suzanne R. Sayward
Maria C. Baler
Abigail Poole

Email abe@ssbllc.com to register

Five COVID-Inspired Estate Planning Resolutions

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Looking ahead to this year’s resolutions, here are five estate planning resolutions that the COVID-19 pandemic has shown us to be more important than ever.

  1. Resolve to Have an Estate Plan

Most of the clients I meet who do not have a Will, Power of Attorney or other estate plan documents know they should have them, they have just put off this task – sometimes for much longer than they should, especially when faced with a global pandemic.  I met many people in 2020 who had put off estate planning and were suddenly in a panic to get it done given what was happening all around them.  If you are similarly situated, make it one of your goals for 2021 to get an estate plan in place.  A simple plan (Will, Power of Attorney, Health Care documents) is better than nothing at all.  If you have young children or assets in excess of $1 million, a Trust may be advisable to meet your planning goals.  An experienced attorney who prepares Wills and Trusts as the primary focus of their practice will give you options and let you decide which plan is best for you at the moment.  

If you already have an estate plan in place (good job!) resolve to review it this year to make sure the provisions of your plan still reflect your wishes.  If it has been more than five years since the documents were signed or you have had changes in your personal or financial situation, meet with an estate planning attorney (virtually of course!) to identify any changes that should be made.

  1. Resolve to Get it Done Right

The advice of an experienced attorney is not cheap and estate planning attorneys are no exception.  However, making sure decisions can be made for you if you are ill, making sure your assets go where you want them to go at your death, managing inherited assets properly for young beneficiaries, protecting assets for your family, avoiding probate and saving your beneficiaries as much income and estate tax as possible are important goals.  The way your estate plan is carried out will have a significant financial and emotional impact – positive or negative – on you and your family.  When something is this important, make sure it’s done right. The temptation to draft your own Will or other legal documents is there and is frankly a poor planning option.  In my 33 years of practice, I have yet to see a Will drafted by a client that will accomplish what the client thinks it will.  In fact, most self-drafted Wills create more problems than they solve.  Proper estate planning is not something that can be done cost-effectively on your own. Seek the advice of an experienced estate planning attorney, not a general practitioner who prepares Wills along with divorce and personal injury law.  Get it done right, and you will have the peace of mind that crossing this task off your list will bring.

  1. Resolve to make sure your Beneficiary Designations are Up-to-Date

Many of your most significant assets – life insurance, retirement accounts, annuities – will be paid to a designated beneficiary at your death.  Properly designating those beneficiaries is more complicated than it may appear, and understanding the implications of certain beneficiary designations is crucial. Designating a trust as beneficiary for the benefit of a young or disabled beneficiary can be instrumental in avoiding a lengthy and costly court proceeding to appoint a guardian, or avoiding the loss of public benefits a disabled beneficiary may be receiving. Understanding how distributions from retirement accounts work after the death of the account owner, and how different beneficiary designations will impact the income tax payable on those distributions is critical to making appropriate designations, and is something that changed significantly when the SECURE Act became law on January 1, 2020. Ensuring your beneficiary designations are consistent with your overall estate plan is vital to accomplishing your estate planning goals.

  1. Resolve to have Health Care Documents in Place

Much of the estate planning you do is for the benefit of your family or other heirs and will never impact you.  Creating health care documents that reflect your wishes is one area of estate planning that will directly and significantly impact you if you experience a period of illness prior to death.  This has never been more apparent than this past year, when so many people became incapacitated, and so quickly, by the COVID-19 virus.  Designating Health Care Agents to make health care decisions for you if you are unable to do so, making sure the people you want to be able to get information from your physicians can do so and will not be obstructed by privacy laws, and determining your care preferences and communicating them to your Health Care Agents and physicians are all crucial to making sure your health care wishes are carried out.  In Massachusetts, the legal document that we use to make sure these things happen are Health Care Proxies, HIPAA Authorizations and Living Wills. The person you name to make health care decisions for you is called your Health Care Agent. These documents are all part of a complete estate plan, and arguably the most important part from your perspective.

  1. Resolve to Make Sure People You Care About Have a Plan Too. 

Estate Planning is important for anyone over the age of 18. College-age children and elderly parents should have Durable Powers of Attorney and health care documents that will allow someone to make financial and health care decisions for them, and have access to information if they are ill or incapacitated.  This year underscored this need, as some college students fell ill far from home, and elderly parents were too sick to make decisions regarding their own care.   Parents of young children should name guardians for their children and create a trust to manage assets for young beneficiaries to avoid a child receiving control of an inheritance at age 18.  Parents who will leave a significant inheritance to their children should consider asset protection planning to protect inherited assets from a child’s creditors, divorcing spouse, etc.  Older couples or others with large estates can save their heirs significant estate taxes in Massachusetts with proper planning.  Elderly parents may want to plan to protect assets from long-term care liability.  

Now that 2020 is behind us and a COVID vaccine is here, we look back on 2020 grateful that we were able to continue to do our work, happy to be able to provide some peace of mind to our clients in these uncertain times, and hopeful that there are better days ahead.  For those of you who are fortunate enough to be alive and well in these challenging times, we recommend you take these resolutions to heart, and create or update your estate plan today.  If a friend or family member needs some inspiration to make estate planning a 2021 resolution, share this article with them.  Wishing you a Happy and Healthy New Year!

Maria 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 current 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.

January, 2021

© 2021 Samuel, Sayward & Baler LLC

5 Ways to Leave a Legacy (but not the Good Kind) 

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If you look up the definition of Legacy in the dictionary, it has two distinct meanings.  The first is  a gift by Will, especially of money or other personal property (e.g. “Her aunt left her a legacy of $50,000”).  The second is something transmitted by or received from an ancestor (e.g. “He left a legacy of love and caring”).  Both of these meanings are common in the estate planning arena.  Clients often plan to leave money, real estate, jewelry, artwork, etc. to family or friends, and most people want to leave their families with fond memories and treasured traditions or customs.  

However, legacies of the second type can also cut the other way.  That is, rather than good will and fond memories, loved ones are left with feelings of anger and resentment.  Often this type of legacy comes from poor estate planning or no estate planning.  

Read on for 5 ways to leave a legacy of pain that lasts long after you’re gone. 

1. Naming co-fiduciaries who cannot work together.  A vital aspect of every estate plan is designating fiduciaries to carry out your wishes.  In a Will, this is your Personal Representative, in a Trust it is the Trustee, and in a Power of Attorney it is your Attorney-in-fact.  These positions can be held by one person or by two or more people.  Sometimes clients feel that it is important to appoint all of their children to these roles because they don’t want to hurt anyone’s feelings by leaving them out.  If your children do not get along or if they cannot work well together, naming them as co-fiduciaries is not going to heal that relationship and will probably make it worse.
 

2. Naming fiduciaries who are not qualified to carry out the job.  For most people it is not necessary to appoint a professional such as an estate planning attorney or a bank as Personal Representative of their Will or Trustee of their Trust.  However, it is important to appoint someone who is conscientious, responsible and competent to carry out the tasks of settling the estate in a timely manner.  These tasks often include updating bank and other financial accounts, gathering and organizing financial statements, making numerous phone calls to insurance companies and IRA custodians, cleaning out the house and readying it for sale, and working with professionals like attorneys and accountants, to name a few.  If the person you are considering naming as a fiduciary does not do a good job managing her personal matters, chances are she is not going to do a good job performing these tasks for you or your estate.
 

3. Treating children differently.  If you have more than one child, consider carefully the possible consequences of treating them differently in your estate plan. By that I mean leaving one child a greater portion of your assets and estate than another child, or directing that one child’s inheritance be distributed outright to her while another child’s share remains in trust to be managed for him.  There are certainly compelling reasons to treat children differently in your estate, such as when you have a child who receives needs-based governmental benefits, a child who struggles with drug dependency, or a child with disabilities that impair her ability to manage assets.   However, if there is not a compelling reason for treating a child differently than his siblings, doing so is likely to leave the child who is singled out feeling angry and resentful, and that anger is often directed at his siblings since mom and dad are no longer around.  In my practice I have seen this result in a total breakdown of sibling relationships which extended into the next generation.
 

4. Not being clear about your wishes for your tangible personal property. If you’re a fan of the TV series Fargo, then you will recall how distribution of a parent’s tangible personal property in a manner that feels ‘unfair’ can create trouble (Season 3).  Tangible personal property consists of items such as a car, jewelry, artwork, tools, collections/collectibles, etc.  In Fargo, one brother received a valuable stamp collection and the other a Corvette.  Sadly, many people don’t need a television show to experience the impact of family discord over the distribution of tangible personal property because they have experienced it in their own families.  If you have valuable artwork, items that have sentimental value to your children, jewelry, or other possessions that could be a source of controversy, designating the recipients of those items rather than leaving it up to your children to ‘figure it out’ will go a long way in ensuring family harmony.
 

5. Conveying conflicting messages to family.   Whether or not to share the details of your estate plan or legacy planning with family members is a personal decision.  For some families, a family meeting to inform everyone of decisions regarding who will serve as Personal Representative of the Will and the distribution provisions of the estate plan is the norm.  For other families, no information is shared.  I see problems arise when a parent shares information, such as who is named as Personal Representative or to whom certain assets will pass, and later changes those decisions without telling family members about the changes.  In my experience, it is a good idea to inform the people you are naming as your fiduciaries (Personal Representative, Attorney-in-fact, Trustee, etc.) in case they are not willing or able to serve – better to find out sooner rather than later.   In addition, your named fiduciaries should be provided with some basic information that will enable them to help in the event you become incapacitated or when you pass away.   This should include contact information for your professional advisors (accountant, estate planning attorney, financial advisor) and the location of your important documents.  While you need not provide your family with information about the value of your estate, maintaining a comprehensive list of your bank and investment accounts, insurance policies, retirement accounts, annuities (including copies of the contract), etc. and informing your fiduciary of the location of that information will go a long way toward the smooth settlement of your affairs. 
 

If you want to leave a legacy of love and fond feelings, take care to consider how your estate planning, or lack of estate planning, may impact those you leave behind.  If we our estate planning attorneys can help you with that legacy planning, please contact us – we’ll help you leave a legacy that will live on in the hearts and minds of your loved ones in a good way. 

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.

December, 2020

© 2020 Samuel, Sayward & Baler LLC

Thirteen Estate Planning Terms You Need to Know

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We recently celebrated National Estate Planning Awareness Week during the week of October 19-25, 2020.  Although it is nice to have an entire week each year devoted to raising awareness of the importance of estate planning, I would argue that 2020 has been National Estate Planning Awareness Year, as the COVID-19 pandemic has brought the importance of estate planning to the forefront of everyone’s mind.  Here at SSB we have had a busy year making sure our clients’ plans are up-to-date, and helping new clients put a plan in place so that they, too, can have the peace of mind an estate plan brings in these uncertain times.

As Estate Planning Attorneys, we know Estate planning is incredibly important and not just for the wealthy.  Estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing a health care agent to make decisions for you should you become ill, appointing an agent to handle your financial and legal matters if you become incapacitated, minimizing taxes so you can pass more wealth on to your family members, and stating how and to whom you would like to receive your assets when you pass away. 

While it should be at the top of everyone’s to-do list, estate planning can often feel overwhelming, and estate plan documents can sometimes seem to be written in their own language.  Here are some important estate planning terms you should know as you think about your own estate plan. 

Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, retirement accounts (IRAs, 401ks), annuities, furniture, jewelry, art, clothing, and collectibles.

Beneficiary

A person or entity (such as a charity) that is designated to receive assets from an estate, trust, account, or insurance policy. 

Distribution

A payment in cash or assets to a beneficiary who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith. 

Funding

The process of transferring (re-titling) assets to a living trust (a trust created during the creator’s lifetime). A living trust will only avoid probate at the trust creator’s death with assets that are funded into the trust during the trust creator’s lifetime, or that will be automatically payable to the trust (i.e. by beneficiary designation) at the trust creator’s death.

Incapacitated/Incompetent

Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Guardianship / Conservatorship

The court-supervised process of appointing a guardian / conservator to make decisions on behalf of an incapacitated or incompetent person, including health care and financial decisions. 

Marital deduction

A deduction that may be taken on the federal and Massachusetts estate tax returns, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal and/or state estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.

Settle an estate

The process of winding down the affairs of a deceased person, and includes identifying and valuing of assets, paying debts and taxes, and distributing assets to beneficiaries.

Trust

A fiduciary relationship in which one party, known as the trust creator, settlor or grantor, gives another party, known as the trustee, the responsibility to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement which specifies the trustee’s duties and powers, the trustee’s obligation to the beneficiary, and the beneficiary’s rights to income or principal from the trust.

Will

A written document with instructions for disposing of probate assets after death. A Will can only be enforced through a probate court. A Will may also include the nomination of guardian for minor children.

If you have any additional questions about estate planning, or would like to consult with an experienced estate planning attorney about your own estate plan, please contact our office. We will be happy to assist you in creating a comprehensive plan that is tailored to your unique needs and goals, so that next year when National Estate Planning Week rolls around, you will have something to celebrate!

November, 2020

© 2020 Samuel, Sayward & Baler LLC

Five Things to Know about Unclaimed Property, You and Your Estate

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“Visit findmassmoney.com and get your money today!” You have probably heard the announcement on the radio and thought it was a gimmick or too good to be true. In fact, the Commonwealth of Massachusetts does hold property, such as bank accounts, stock dividends, uncashed paychecks, and insurance refunds, that appear to have been abandoned because no action has been taken with the property for a period of time (3 years for most properties). This so-called “unclaimed property” can range from a few dollars to tens of thousands of dollars or more. An individual, the Personal Representative (Executor) of a deceased person’s estate, and sometimes the heir of a deceased family member can file a claim to receive the unclaimed property. Here are a few things to consider and know about unclaimed property in connection with you and your estate:

Regularly check to see if you have any unclaimed property

It’s easy to visit the unclaimed property website of the Commonwealth of Massachusetts. If you have lived in states other than Massachusetts, visit that state’s equivalent or this website which searches the databases of multiple states and directs you to the appropriate state link to file a claim.

Make it a good estate planning habit to check for unclaimed property annually, such as when you file your taxes each year.

Complete the claim online

The Massachusetts Unclaimed Property Division website requests your name (and your town of residence), then locates all unclaimed property that matches the information you provided (as does the multi-state database). You simply select the claim that applies to you, provide additional information and submit the claim electronically. The Unclaimed Property Division will then mail you documentation to complete and return, then mail a check representing the amount of unclaimed property owed to you. The representatives at the Massachusetts Unclaimed Property Division with whom I have interacted were extremely helpful in answering questions and addressing concerns, so do not hesitate to be in touch with them.

The Personal Representative of your estate will file a claim to receive your unclaimed property after your death

If you do not file a claim to receive any unclaimed property while you are alive, the Personal Representative of your estate will be responsible for doing so. The Personal Representative has a fiduciary obligation to consolidate all assets associated with your estate after your death, including unclaimed property. Typically, it is more complicated for the Personal Representative to receive the unclaimed property because he or she must provide additional documentation, including a death certificate and proof of his or her authority over your estate as Personal Representative via Letters of Authority issued by the Probate Court.

Something to keep in mind is that if significant unclaimed property is discovered several years later, obtaining it for the estate may be further complicated if the original Personal Representative is deceased, or one or more of the beneficiaries of the estate are deceased.

Your surviving heirs may file a claim to receive your unclaimed property after your death instead

If there was no need to appoint a Personal Representative of your estate at the time of your death, and if the unclaimed property amount is less than $1,000, and if the beneficiaries of your estate are undisputed, it is possible to avoid the rigmarole of a probate court proceeding to obtain the unclaimed property. For example, if you have a surviving spouse or a sole surviving child, the so-called “Affidavit of Heirs” form may be completed by the beneficiary instead. The Affidavit of Heirs is unique to the Unclaimed Property Division and provided by the Division representative. It requires the heirs (beneficiaries) of the estate to be identified and to swear the information on the form is true and correct, and the heir is entitled to the unclaimed property.

Deposit your unclaimed property funds upon receipt; beware of taxes!

You should deposit the unclaimed property check upon receipt. If the Personal Representative of the estate receives the check, he or she should deposit it in the estate bank account along with any other estate assets. After the expenses of the estate are satisfied, the Personal Representative will divide and distribute the remaining funds among the estate’s beneficiaries. Keep in mind that income taxes may be payable for the year the unclaimed property is received depending on the type of property claimed. A knowledgeable accountant should be contacted to provide advice on this matter.

It’s good Estate Planning practice to remember to check for unclaimed property in your name annually, so you can save your heirs or the Personal Representative of your estate the trouble of claiming that property after your death. At Samuel, Sayward & Baler LLC, our estate planning attorneys and probate attorneys regularly guide and assist our clients who are serving as Personal Representatives of estates to receive and properly deposit unclaimed property. If you live in Massachusetts and find yourself needing assistance in claiming the unclaimed property of a deceased person, we would be happy to help you.

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

November, 2020

© 2020 Samuel, Sayward & Baler LLC

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

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