Articles and Blogs

The Do’s and Don’ts of Estate Planning According to the Movie Knives Out

January 15, 2020 by Attorney Abigail V. Poole

Over the holidays, I had the pleasure of seeing the movie Knives Out in the theater. Knives Out is about an elderly author who dies shortly after a family gathering, and the subsequent inheritance of his multi-million-dollar estate. The plot slowly reveals that the author’s death and his relationships with his family members and employees may not all be as they first seem. Naturally, I was curious to see the extent of artistic license taken versus my “real world” perspective as an estate planning attorney and probate administration attorney with regard to the inheritance and dealing with large estates. Here are a few do’s and don’ts of estate planning according to the movie Knives Out in comparison to the actual practice of estate planning and administration (warning – spoilers ahead).

Do Update Your Estate Plan Regularly to Reflect Your Wishes. In the movie, the author updates his Last Will and Testament shortly before his death and drastically changes who will inherit his estate from his family to an employee, thereby cutting off his family members from receiving any portion of his estate.

Practically, his family members could contest his Last Will and Testament in court for several different reasons in an effort to invalidate the Will and inherit the estate instead. To combat an anticipated challenge to the Will, a so-called “no contest” provision (also known as an “in terrorem” or “poison pen” provision) may be included in a Will. The no contest provision basically states that if any person who stands to inherit a portion of your estate challenges the Will he or she will receive nothing. Such a provision is most effective when a person has something to lose in the event of a contest and it is clear that the Will creator intended to include the provision. Not all states recognize these provisions as valid but Massachusetts does. Incidentally, part of Knives Out was filmed in Massachusetts at the Ames Mansion in Borderland State Park located in the towns of Easton and Sharon.

Don’t Tell Your Family Members That They Are Disinherited Otherwise It May Result in Your Untimely Demise If You Are A Rich Author. The author tells some of his family members that they are disinherited from his estate and will no longer receive financial support from him while he is alive. This leads to the author’s demise, which is investigated by an eccentric and cunning southern gentleman detective to determine if the author was, in fact, murdered, and by whom. The detective’s quest to discover the murderer leads him to the employee who is named to inherit the estate, which brings us to the last avenue by which the family could inherit the author’s estate: the so-called “slayer statute”. Under the slayer statute, if the person who stands to inherit from an estate is convicted of the deceased’s first-degree murder, second-degree murder or manslaughter, he or she is prohibited from receiving the inheritance (G.L.c. 265, §46).

In reality, it is your decision as to the information you wish to share with your family members about your estate plan. If it is important to you to be transparent about your wishes and you are comfortable sharing that information, you may wish to speak with each family member alone or hold a family meeting or simply provide copies of your estate plan. At the very least, provide your family members with your estate planning attorney’s contact information so they know who to call for guidance after your death.

Do Share Information About The Inheritance After The Person’s Death If You Are The Personal Representative. The Personal Representative (Executor) of the deceased’s estate must administer the estate according to the deceased’s Will or the state intestacy laws. One of the Personal Representative’s administrative duties is to inform those who will be receiving inheritances from the estate. The Personal Representative should work closely with an attorney to administer the estate properly, including filing probate pleadings, to ensure he or she completes all the necessary tasks according to certain deadlines to reduce the risk of liability.

Don’t Expect A Reading of The Will To Learn About Your Inheritance. The reading of the author’s Will is a pivotal and dramatic moment in Knives Out. In reality, readings of Wills rarely take place after the deceased’s death. Instead, copies of the Will are provided to the recipients of the estate by the Personal Representative. Additionally, the original Will is filed with the probate court along with the pleadings and becomes public record.

If you have some free time and enjoy movies with well-crafted dialogue delivered by a talented multigenerational cast, surprising plot twists and turns, and filmed in Massachusetts, I suggest you see Knives Out. It is not only entertaining but also highlights the importance of having an up-to-date estate plan in place.

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 such as long-term care planning. 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.

January, 2020

Five Taxes your Heirs May Pay (or not) After your Death

January 1, 2020 by Attorney Maria Baler

Most people understand that estate planning and inheritance planning involves making sure that people you trust can make decisions for you if you become incapacitated during your lifetime, and making sure your assets go where you want them to go when you die. It should also involve identifying and planning to minimize the five different types of taxes that may be payable by your heirs after your death.

Federal Estate Tax – When a United States citizen or resident passes away, the estate of the deceased person may be required to file a federal estate tax return and may have to pay a federal estate tax. The estate tax is a one-time tax that is payable after death on the value of your “estate”, which is essentially any assets you own or control at the time of your death. A federal estate tax return is due on the nine-month anniversary of the deceased’s date of death, and any estate tax due must be paid by that time to avoid interest and penalties from accruing.

The good news for most people is that the federal estate tax exemption is $11.58 million as of January 1, 2020 ($11.4 million in 2019). This means that if the value of the assets you own at the time of your death (your so-called “taxable estate”) is less than the exemption amount, you do not have to file a return or pay a federal estate tax. Estate tax is also not payable on the value of assets left to your surviving spouse or to charity. The federal estate tax exemption is adjusted annually for inflation. On December 31, 2025, the federal tax law that gave us such a large federal exemption amount will “sunset” unless Congress takes action. Upon sunset, the federal estate tax exemption amount will revert to the prior level, adjusted for inflation, most likely a little more than $5 million.

If your “estate” is greater than the federal estate tax exemption, speak to your estate tax planning attorney and tax advisors about planning steps you can take to reduce or eliminate any federal estate tax your estate may have to pay. Don’t forget about trusts when it comes to estate tax – certain type of trusts, as well as gifting strategies, including charitable giving, can be effectively reduce the estate tax payable at death.

Keep in mind that even if you do not owe federal estate tax at death, it may still be advisable for the Personal Representative of your estate (formerly known as your Executor) to file a federal estate tax return so that your surviving spouse’s estate can take advantage of your unused federal estate tax exemption.

State estate tax – If you live in Massachusetts, you live in one of 18 states plus the District of Columbia that has a separate state estate or inheritance tax. If you die a Massachusetts resident, your estate must file a Massachusetts estate tax return if the value of your estate is $1 million or more. This is a relatively low threshold. For many residents of Massachusetts who own a home, have a retirement account of significant value, and own life insurance, this is a tax they should be aware of and plan for.

There are several bills pending in the state legislature that would raise the Massachusetts estate tax exemption amount, however none of them has succeeded to date. Until the exemption amount is increased, as with the federal estate tax, the Massachusetts estate tax can be reduced if not eliminated with thoughtful estate tax planning with the advice of your attorney. As with the federal estate tax, a Massachusetts estate tax return must be filed and any tax paid within nine months after death.

Personal Income Tax – No matter what time of year you pass away, final state and federal income tax returns will have to be filed to report the income you earned or received during the year of your death from January 1 through the date of your death. It is important to keep good records of your income and deductions, and to keep your tax records organized, so that your heirs or others who are settling your estate will be able to provide your tax preparer with the information necessary to prepare your final personal income tax returns, and so that those returns can be filed timely to avoid penalties and interest that may accrue and be payable by your estate.

It is also important to keep your personal income tax filings up to date while you are alive. Collecting information necessary to file the deceased’s final personal income tax returns is hard enough. Trying to reconstruct past years’ records in order to file returns that are past due is difficult, time consuming, and can be very expensive when interest and penalties for unpaid taxes start to add up. Keep in mind that the Personal Representative of your estate can be personally liable for any unpaid tax liabilities. This is not a legacy anyone should leave.

Fiduciary Income Tax – The fiduciary income tax is a little-known income tax payable by estates and trusts on income earned during the year. For example, if you die owning 1000 shares of Exxon stock and a three-family rental property, those assets are part of your “estate” at your death. The dividend income received on the Exxon stock and the rental income paid by the tenants residing in your rental property after your death is “income” earned by your estate. This income must be reported on a fiduciary income tax return each year your estate remains open. If these assets are owned by a trust, income earned on trust assets is also reported on a fiduciary income tax return.

Fiduciary income tax can be very steep, considering that the tax brackets are such that estates and trusts reach the highest federal income tax bracket of 37% at only $12,750 of income. To avoid paying unnecessary fiduciary income tax, it is best to plan with your attorney to ensure your estate will be administered efficiently, and that any trust you create is structured properly with tax savings in mind, even if assets will stay in trust for the benefit of your heirs.

Income Tax on Retirement Accounts– The government kindly allows us to save money in our retirement accounts – IRAs, 401ks, 403bs – without paying federal or state income tax on the funds contributed to those accounts. The end result is that many people have large “qualified” retirement accounts on which income tax has never been paid.

The tax laws require money to be withdrawn from retirement accounts, and state and federal income tax paid, when we reach a certain age, or within a certain period of time after the account owner dies. The SECURE Act, signed into law by President Trump just before Christmas as part of the budget bill, makes significant changes to these rules.

If you have large retirement accounts, it is important to understand the changes made to these tax rules by the SECURE Act, how much your beneficiaries will have to withdraw from these accounts and when, and to plan to minimize the income taxes payable on those distributions if possible. This is not as easy as it used to be now that the SECURE Act is law; however, there are still planning options to consider that can have a big impact on how much of those accounts may be lost to income taxes after your death.

Death and taxes (and estate tax and income tax planning!) are not most people’s favorite topic (present company excluded), however you can save your heirs a lot of money, and maximize the inheritance they receive, if you take the time to understand the taxes that are potentially payable at death and take steps to plan to minimize or eliminate these taxes before they become due.

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 currently serves on 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, 2020

“I Just Need a Will”

December 15, 2019 by Attorney Suzanne Sayward

Potential clients sometimes call our estate planning and elder law firm to make an appointment to see an attorney stating that they “just need a Will.” Ironically, a Will is often the least needed estate planning document. For many people, their estate will pass to their intended beneficiaries without a Will exactly as it would if they had a Will. That’s because the Massachusetts intestate law that determines the people to whom an estate will be distributed in the absence of a Will, is in keeping with the distribution and inheritance planning wishes of many people.

Massachusetts law regarding wills and inheritance provides that if a member of a married couple dies without a Will and all of the couple’s children are children of the marriage, then the estate of the deceased spouse will pass entirely to the surviving spouse. If the surviving spouse later dies without a Will without having remarried, her estate will pass to their children in equal shares. Further, many married couples own all of their assets jointly (their home, bank accounts, investment accounts) or have beneficiaries designated to receive their assets (IRAs, 401Ks, life insurance, etc.). In that case, no assets pass under the terms of the Will and instead pass by operation of law (joint ownership) or via the ‘contract’ made with the financial company or life insurance company when that beneficiary designation form was completed.

Of course, for people who do not have a situation that fits neatly under the intestate statute, a Will, and often a Trust, is vital. This includes blended families, people who have beneficiaries with disabilities or special needs or beneficiaries who struggle with addiction or beneficiaries who are spendthrifts. It also includes those with minor children and those who want to reduce estate tax or provide creditor protection for the inheritance they leave their beneficiaries.

Frankly, the essential estate plan documents that everyone over the age of 18 should have in place include a durable Power of Attorney and a Health Care Proxy. These documents appoint someone to pay bills, manage assets, deal with the insurance company and make medical decisions if the person making those documents has an accident or gets sick and cannot do those things for himself. The law does not make it easy for someone to do these things in the absence of Power of Attorney or Health Care Proxy. In the case of incapacity without those documents in place, the law requires a court proceeding to appoint a conservator to manage an incapacitated person’s finances and another court proceeding to appoint a guardian to make medical decisions. These are expensive, time-consuming, and public proceedings and best avoided.

Give us a call us at 781-461-1020 and let us help you create the right estate plan (even if you just need a Will) for your family.

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.

December, 2019

Five Important Numbers to Know for Long-Term Medicaid Benefits

December 1, 2019 by Attorney Abigail V. Poole

“What happens if I need long-term care in a nursing home and I can’t afford to pay for it?” I hear this question frequently from clients who are concerned about long-term care because the cost of nursing home care is so high. In Massachusetts, nursing home care costs anywhere from $11,000 to $17,000 per month ($132,000 to $204,000 per year) and continues to increase regularly. The short answer is Medicaid (MassHealth), a joint federal/state government benefits program, will cover your long-term care nursing home expenses so long as you meet the medical and financial eligibility criteria for the program. Here are 5 important numbers to keep in mind with respect to eligibility for long-term care Medicaid benefits in Massachusetts.

You Must Be 65 Years of Age or Older.

The first hurdle to apply for and receive Medicaid long-term care benefits is that you must be 65 years of age or older.

You May Not Have More Than $2,000 of Countable Assets.

Medicaid has strict limitations with regard to the value of assets an individual may own and qualify for long-term care Medicaid benefits to pay for nursing home care. Assets may be deemed to be “non-countable,” “inaccessible” or “countable.” Countable assets include assets such as bank accounts, investments, most retirement accounts and the cash value of life insurance, to name a few. An individual may have only $2,000 in countable assets in order to be eligible for long-term Medicaid benefits. Non-countable assets include pre-paid burial accounts, one automobile and a primary residence. Inaccessible assets are less common and include things like the proceeds from a lawsuit that has not yet settled or an anticipated inheritance during the estate administration phase and before distribution. Countable assets above that $2,000 threshold must be spent down (in permissible ways) before eligibility will be achieved.

A Spouse Living in the Community May Keep an Additional $126,420 of Countable Assets.

If the individual who is residing in the nursing home and applying for Medicaid benefits has a spouse who is living in the community (i.e. not in a nursing home) that community spouse has asset limitations, too. The spouse is allowed to own only $126,420 of countable assets for 2019. This amount, called the Community Spouse Resource Allowance (CSRA), is typically increased every year. This means that a married couple living in Massachusetts may have a combined total of $128,420 in countable assets (2019). If they have additional countable assets, such as an investment account or an IRA worth $100,000, then those funds must be spent down before the nursing home spouse will be eligible for Medicaid benefits. An experienced elder law attorney can advise a married couple of options for dealing with excess assets in this situation.

Beware the 5-Year Look Back Period!

An important thing to remember about Medicaid benefits eligibility is that Medicaid will review any transfers of your assets made within the five years (60 months) prior to the Medicaid application. This is often referred to as the 5-year look back period. Medicaid can request copies of account statements for the last five years to check for gratuitous transfers. For example, if you gifted $15,000 to your child three years prior to applying for Medicaid benefits, Medicaid will view this as a disqualifying transfer of funds because you could have otherwise utilized that money to cover a month of your nursing home expenses. Disqualifying transfers made within the 5-year look back period will result in a period of ineligibility.

The Applicable Divisor is Currently $367.21 Per Day.

Medicaid determines the period of ineligibility for Medicaid benefits due to a disqualifying transfer by dividing the value of the asset transferred by the average daily cost of a nursing home as determined by the state. As of November 1, 2019, this transfer divisor is $367.21 per day in Massachusetts. This means that $15,000 you gifted to your child three years ago will result in 41 days of ineligibility for Medicaid benefits to you now. But here’s the kicker – the disqualification period only begins to run once you have no more than $2,000 of countable assets. This means that after all of your funds are spent, you will then be ineligible for Medicaid benefits for 41 days. This is a serious ‘trap for the unwary’ and why long-term care planning is so important.

Another trap for the unwary can occur when someone has made a large gift, such as putting the house in the children’s names, and then applies for Medicaid benefits prior to the expiration of five years. In that case, the ineligibility for Medicaid benefits can extend well beyond five years from the gift.

The financial eligibility rules for long-term Medicaid benefits are complex and everyone’s situation is unique. The elder law and medicaid planning attorneys at Samuel, Sayward & Baler LLC can assist you with planning in advance to preserve your assets for your family in the event you require Medicaid long-term nursing home care benefits and can help you prepare to navigate the Medicaid application process.

December, 2019

In Estate Planning, Preparation Is Key

November 15, 2019 by Jennifer Poles

It is everyone’s hope that they will die after they have managed to get everything in order so that their family will have an easy time of it and not be left picking up the pieces. Here are some things to put on your Estate Planning To Do list, to make it easier on your family if you depart this world before tying up all the loose ends:

Identify a place in your house where you keep important information and documents and let trusted family members (or personal representatives) know where that is. I suggest a well-organized filing cabinet with clearly labeled folders containing important information and copies of your legal documents such as wills, trusts, powers of attorney and health care proxies.
Create a list of your assets that includes the institution where each account is located, the account number, your contact person at that institution (if any) and their contact information. Include on this list bank accounts, investment accounts, annuities, life insurance, retirement accounts, etc. Keep this list updated, and in the place where you keep other important papers so that it can be found.
If you have original stock certificates, savings bonds, cash or other valuables in your house, make a note of where those items are kept so that they are not overlooked or inadvertently thrown out.
Don’t forget digital estate planning. Create a list of usernames and passwords for any important online accounts – financial, photo storage, email, social media, document storage accounts. Keep this list updated and in the place where you keep other important papers so that it can be found.
If you have young children or a child with special needs, consider a letter of instruction that provides important information about your child – the name and contact information for their physician, allergies, other important medical information and other things you think someone should know if they had to care for your children unexpectedly.
Review and update beneficiary designations on life insurance and retirement accounts in consultation with your estate planning attorney to ensure the designations do not disrupt the other provisions of your estate plan.
Do your best to keep your income tax filings up-to-date so that your family will not have to try to piece together that information in order to file income tax returns after your death. This is a painful and expensive process that can lead to lingering liability for family members.
If you have a safe deposit box, make sure at least one other trusted family member’s name is on the box so that they will have access after your death This is especially important if your original Will or other estate plan documents are in the box.
And finally, make sure your estate plan documents are up-to-date, and that you have left instructions for your family regarding where to find them, and the contact information for your estate planning attorney.

Tackle one of these tasks every month, and within a year you will be leaving your family well-prepared if something unexpected occurs.

November, 2019

Estate Planning and Taxes – Five Things to Know About Taxes After Death

November 4, 2019 by Attorney Natalene Ong

After an individual’s death, his or her assets will be gathered, affairs settled, debts paid, tax returns filed and assets distributed as directed by the deceased’s Will and/or Trust or if those documents do not exist as provided by Massachusetts intestate law. Don’t neglect the importance of taxes and filing tax returns after death. The Personal Representative (formerly Executor) of the deceased’s estate may be responsible for filing a number of tax returns. Here are five things to keep in mind with respect to taxes after a death.

See the chart for more information on tax deadlines.

A Personal Representative must file the deceased’s final income tax return for the year of death and prior year returns that have not been filed. The deceased’s final income tax return will reflect income earned or received by the deceased from January 1 of the year of death through the date of death.

What should you do if the deceased failed to file tax returns in the years before his or her death? It is not uncommon for a deceased person who was ill for the last years of his or her life to have failed to file his or her income tax returns. It is important for a Personal Representative to investigate whether required returns have been filed and be certain about a decedent’s income tax liabilities. A Personal Representative who distributes estate assets and fails to pay income taxes owed by the deceased will be personally liable to pay those taxes.

A Personal Representative may be required to file a Massachusetts estate tax return if the value of the estate assets exceeds $1 million. A deceased’s estate includes all assets that he or she owned and controlled, whether held in his or her individual name, jointly with others, or in a revocable trust, and includes life insurance proceeds and retirement assets. If the estate’s assets exceed $1 million, tax is computed on the entire value of the estate. Tax is not payable on assets passing to a spouse or to charity. Don’t forget the deadline for estate tax returns. The filing deadline for estate tax returns is 9 months after death. A Personal Representative who distributes assets and fails to pay estate taxes owed will be personally liable to pay those taxes.
A Personal Representative may have to file a federal estate tax return if the value of the estate assets exceeds the federal estate tax exemption ($11.4 million for 2019). Even if the value of the estate does not exceed the federal estate tax exemption amount, a federal estate tax return should be filed if the decedent is survived by a spouse so that the deceased’s unused exemption can be used by a spouse at his or her death. The filing deadline for the federal estate tax return is 9 months after death.
A Personal Representative and Trustee may have to file fiduciary income tax returns for an estate or a trust, respectively. An estate is a taxpayer and must obtain a tax identification number and file a fiduciary income tax return for the estate if income is earned on estate assets or received during the administration of the estate. A revocable trust becomes irrevocable after the death of the trust creator and must obtain a tax identification number at that time and file a fiduciary income tax return for all income earned by trust assets after the death of the creator. Filing deadlines for estate or trust fiduciary income tax returns depend on whether the estate or trust elects to file its tax return on a calendar year basis (ending in December) or a fiscal year basis (rolling 12 months from death). In both instances, the fiduciary income tax return is due 4.5 months after the end of the tax year elected.
Income tax planning opportunities exist for estates and trusts and beneficiaries because they may not be in the same income tax brackets. The highest income tax brackets for estates and trusts apply at low levels of income, while the highest income tax brackets for individuals apply at high levels of income. For this reason, timing distributions from an estate or trust to its beneficiaries can save money. Beneficiaries pay income tax on any estate or trust income distributed to them in any tax year at personal rather than fiduciary income tax rates. It is important to work with an estate planning attorney to maximize your planning efforts and understand the tax implications and responsibilities of a deceased trust and estate.

Natalene B. Ong, Esq. is an estate planning attorney at Samuel, Sayward & Baler LLC, a law firm in Dedham that focuses on advising clients in estate planning, special needs planning, estate and trust administration and elder law. 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, 2019

What do you want your estate plan to say?

October 15, 2019 by Attorney Natalene Ong

A question I am often asked as an estate planning attorney is basic: what is estate planning? Estate planning is commonly thought of as protecting, preserving and enhancing families by accumulating, conserving, and distributing assets. From this perspective, tax, tools and techniques are important. Just as significant is the opportunity to pass values to loved ones. Estate plans help individuals tangibly care for family and loved ones. Yet, for every plan, I ask this – if none of your beneficiaries survive, where do you want your wealth to go? Many clients name individuals or charities they care about.

For many, this is understandably a difficult question to consider and answer. I am taking courses to become a Chartered Advisor in Philanthropy (CAP) and learning about how to help individuals thoughtfully consider this dilemma. I begin with a question – what is your personal vision for the world and for yourself? Every person has a unique answer, and this is much of what makes estate planning such a joy. A list of questions to consider as you create your estate plan are listed below.

First, even 18-year-olds need estate plans to choose the people they want to manage their financial affairs and to make their health care decisions in the event of incapacity with the creation of Durable Powers of Attorney and health care documents. As they consider how they will live their lives and as you guide younger family members as they make decisions about the values that they will live by, a couple of important questions to reflect on are the kind of person you want to be and the kind of world you would like to be part of. For older adults, it is worth thinking about the kind of world you want for the younger generation.

In mid-life, a good question to reflect on starts with thinking about when you were younger. Did you have goals back then that you have not yet accomplished but you still want to pursue? If so, how can you work toward these goals now? Beyond yourself and your loved ones, would you like to have a positive impact on any people or things in this world?

Finally, for individuals toward the end of their lives, an interesting posture is to think about one’s estate plan as the final piece of teaching that you are able to impart as a legacy you leave to your loved ones.

What would you like your estate plan to say?

I would love to listen and hear your thoughts and work with you to create an estate plan to accomplish your goals and reflect your values.

October, 2019

5 Things to Consider Before Getting Hit by the Bus

October 1, 2019 by Attorney Suzanne Sayward

In my estate planning and elder law practice we discuss the hard topics of sickness and death with our clients and help them plan for their legacy and the possibility of incapacity and the eventuality of death. A primary purpose of undertaking this legacy and inheritance planning is to lessen the burden of these events on loved ones. We often use the euphemism ‘getting hit by the bus’ to begin the discussion and get our clients thinking about what the reality of that situation would look like if they were suddenly no longer available or experienced an early or unexpected demise. Here are five things to consider before getting hit by the bus.

Access to Money. If you were hit by that bus, would your family be able to get access to funds to pay your bills, take care of you and your family, or pay for funeral expenses? Who would manage your funds in the event of an early death? What if you don’t have any close family members? Is there someone who will do this for you? For many people their financial information is now available only via online access; they do not receive monthly statements in the mail. This can be a real problem if you have not prepared a list of your accounts (and, at the risk of horrifying IT people everywhere, your passwords) and made this information available to at least one trusted person. Consider how someone would figure out what you own and how to access it.
Life Insurance and Other Benefits. If you have one or more life insurance policies, does someone know about them? Do your beneficiaries know they are your beneficiaries? One NBC news story estimated that there is more than $1 billion of unclaimed life insurance sitting with insurance companies because the beneficiaries are unaware of the existence of the policies. If your employer, or former employer, offers life insurance, disability insurance or other benefits, does anyone in your family know this? If you receive a pension, does that pension continue for the benefit of your spouse? In full? In part? How will your spouse know that she is receiving the full amount to which she is entitled if you meet an untimely death? Have you checked your Social Security benefits lately so that you know the benefits to which your family would be entitled in the event of your death or disability? You can do that on the Social Security Administration’s website.
Health Care Proxy & End of Life Medical Decisions. Does your family and your Health Care Agent understand your wishes for end of life care should you suffer a stroke or other debilitating event that leaves you incapacitated? It is so important to have these conversations, both to ensure your wishes are carried out and for your family’s peace of mind. I have clients who had to make end of life decisions for loved ones and who felt as though they did not have a clear understanding of the decision their family member would have made. This left them feeling troubled for a long time. The American Bar Association publishes a Tool Kit for health care decisions which includes a Health Care Proxy Quiz intended to help people start the conversation about end of life decisions. The Conversation Project is “dedicated to helping people talk about their wishes for end-of-life care” and is a great resource for these discussions which can be difficult.
Final Arrangements. Does your family know your wishes regarding burial or cremation? Who should be notified of your passing? How will these folks be found? Making this information available to the people who will make final arrangements for you is critical. This is especially important for people who do not have family nearby, or who may be estranged from their family.
Last Will and Testament. Do you have a Will and if so, does your family know where to find it? A Will is an important part of your estate plan. Inquiries about the existence of a Will for a deceased person appear regularly on the Massachusetts Bar Association listserv, posted by attorneys for surviving family members who don’t know whether or not their loved one left a Last Will and Testament. Don’t let this happen to you. Inform your family and the person you’ve named as your Personal Representative of the name of your attorney and the location of your important estate planning documents including your Last Will and Testament. If you haven’t yet made a Will, put that at the top of your to-do list.

It is always hard for family and friends when someone passes away. In addition to grieving, there are the tasks and seemingly never-ending paperwork that need attention following a death, even more so if it is an early or untimely death. For some people, a health diagnosis serves as a wake-up call to get their affairs in order. When an unexpected event results in death or incapacity, there is no time for that. Every day is a gift for all of us. Take a minute to imagine what would happen if you ‘got hit by the bus’ and then plan to ensure that your family has access to the information they need. We can help – if you don’t have an estate plan, or if it’s been more than five years since you’ve reviewed your Last Will and Testament, call us at 781/461-1020 or email us to schedule an appointment with an estate planning attorney to make sure you have a strong plan for your legacy. In the meantime, watch out for that bus!

October, 2019

Planning Now For Long-Term Care After Incapacity

October 1, 2019 by Attorney Abigail V. Poole

A big concern of many of my estate planning clients is what happens if they need long-term health care in a nursing home but they cannot make important financial and health care decisions on their own anymore due to dementia, serious injury or prolonged illness. This is especially relevant if Medicaid (MassHealth), the federal/state program that provides benefits to pay for long-term nursing home care expenses, will be necessary. There are two essential estate planning documents that you can complete now to alleviate these concerns: a Power of Attorney and a Health Care Proxy.

A Power of Attorney appoints a person called an attorney-in-fact to make financial decisions on your behalf when you cannot do so yourself. A Health Care Proxy appoints a person called a health care agent to make health care decisions for you if you are unable to do so yourself. Both documents should include specific language to give your appointed agent the authority to manage your long-term care in a nursing home. Below are a few of the provisions that should be included in these documents.

Power of Attorney

Your Power of Attorney should be comprehensive in order to address anticipated and unanticipated long-term care circumstances. For example, the Power of Attorney should include language that permits your attorney-in-fact to complete an application for Medicaid benefits on your behalf and appeal any denial of benefits for you. Your attorney-in-fact should also have authority to sign nursing home agreements on your behalf. However, it is important your attorney-in-fact’s authority is limited so that he or she cannot sign an agreement that restricts your rights (or the rights of your estate) to pursue litigation in the event you suffer harm; many of these agreements mandate arbitration and/or mediation in the event of the nursing home’s illegal or harmful actions toward you. A new federal rule attempts to curtail mandated arbitration in agreements but does not ban it outright. Additionally, it may be appropriate for your Power of Attorney to give your attorney-in-fact the authority to make gifts of your assets, and designate beneficiaries of bank accounts, retirement accounts, annuities and life insurance policies. The Power of Attorney may also include provisions that allow your attorney-in-fact to change your estate plan. The purpose of these provisions is to permit your attorney-in-fact the flexibility to appropriately manage, transfer, or spend down your assets to qualify you for Medicaid benefits, if necessary. Your Power of Attorney can be drafted so that only certain attorneys-in-fact have the authority to take specific actions, and only certain family members can receive gifts of your assets. Although these powers may not be appropriate in every case, if you anticipate that you may wish to apply for Medicaid benefits in the future, your Power of Attorney should contemplate that these types of actions may be necessary.

Health Care Proxy

Your Health Care Proxy should include the standard powers given to your health care agent under Massachusetts law. The Proxy should also contain expanded powers to permit your health care agent to assist with long-term care matters, with the goal of eliminating the need to petition the court to appoint a guardian to make health care decisions on your behalf in certain situations. For example, your Proxy should give your health care agent the ability to authorize the administration of medication, employ and terminate the employment of doctors and other medical providers, admit and discharge you from a medical facility, and sign a MOLST (Medical Order for Life-Sustaining Treatment) on your behalf. In the event it is necessary to go to court, the Proxy’s expanded powers clearly express your wish to give your agent the authority to take certain actions and may simplify the appointment process.

If you already have these documents, I recommend that you contact an attorney experienced in elder law and estate planning to review them to ensure that the necessary long-term care planning provisions are included. If you do not have a Power of Attorney or Health Care Proxy and wish to learn more about them from an estate planning attorney in a one-on-one meeting, an attorney at Samuel, Sayward & Baler LLC can meet and discuss these documents with you. Alternatively, you may join Attorneys Suzanne R. Sayward and Abigail V. Poole on Thursday, October 17^th at 1:00 p.m. for a presentation on this topic at the Dedham Senior Center located at 735 Washington Street, Dedham, Massachusetts. Please RSVP to Courtney Daly at (781)326-1650.

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.

October, 2019

Five Reasons to Review Your Estate Plan

September 1, 2019 by Attorney Maria Baler

I see clients every day who sheepishly tell me they have been meaning to update their Wills and Trusts for years, but just haven’t found the time to do so. First things first – let the guilt go. Procrastinating about estate planning is nothing new and is understandable in many ways. Talking about illness, death and taxes is not most people’s idea of a good time (except for us estate planning attorneys). That being said, there are times in life when it’s time to move updating your estate plan off the “to do” list and on to the “done” list. Here are those times:

You have Young Children

If you have young children, your estate plan needs to do two important things: address the care and custody of your minor children (under age 18 in Massachusetts) should you pass away, and address the management and distribution of the assets you will leave them. Your Will is the document in which you name a guardian for your minor children. The guardian is the person who will decide where your children live and attend school, what type of health care your children receive, and make other day-to-day decisions regarding your children’s care and upbringing. If you do not have a Will naming a guardian, family members or others may petition the Court to appoint someone as your children’s guardian. The Court will have the difficult job of choosing among those who ask to be appointed without the benefit of your input. Don’t lose the opportunity to put your children in the right hands by neglecting to speak with a lawyer who has experience drafting Wills and Trusts for families with young children!

After you have made sure that the right people will be raising your children, you need to make sure that the inheritance you leave them is preserved and protected for them. Creating a Trust that sets out when and for what purpose your children will receive the inheritance you leave them, and names a responsible person (a Trustee) to manage those assets is the best way to do this. Estate planning and Trusts are not just for those with millions of dollars. Think about the assets your children would receive if you passed away – consider your home, your life insurance, your retirement accounts, your savings and investments. Then think about how you feel about your children receiving those assets at age 18. If this makes you uncomfortable, a Trust should be a part of your estate plan. An experienced estate planning attorney can help you set up a Trust for your minor children. While funds are held in trust for your children’s benefit, the Trustee may use them for a child’s education, living expenses, health care, or other purposes you specify.

The Value of your Estate is more than $1 million

If you are a Massachusetts resident and the value of your “estate” (your home, retirement accounts, life insurance, bank and investment accounts) is more than $1 million, your estate will pay an estate tax to the Commonwealth of Massachusetts at your death unless your assets are left to your spouse or to charity. The estate tax is a graduated tax. With tax rates ranging from 6.4% (for estates just over $1 million) to 16% for estates in excess of $10 million, the tax bill can be significant. Estate taxes and estate planning are closely connected. Whether you are married or single, there are planning strategies that can be employed to reduce the estate tax payable at your death. If you are married, this planning must be done while both spouses are alive.

For example, Jim and Sue have assets of approximately $1.5 million. If all assets are owned jointly or left to the surviving spouse at the first spouse’s death, the surviving spouse will have $1.5 million of assets at her death and will pay Massachusetts estate tax of approximately $70,000. If instead the first spouse to die leaves $700,000 of assets in trust for the benefit of the surviving spouse, the surviving spouse will have a taxable estate of only $800,000 ($1.5 million minus $700,000), and no estate tax will be payable at the surviving spouse’s death. In this example, creating and funding the right type of trust will save Jim and Sue’s family $70,000 in Massachusetts estate tax, while at the same time ensuring all of the assets are available for Sue’s use during her lifetime.

You Created your Estate Plan Documents before 2012

In 2012, after decades of probate and trust laws that estate planners had come to know and love, the Massachusetts legislature made big changes to the laws that govern Wills, probate and Trusts in our state. These changes in the law were favorable in many respects. Although these changes did not make Wills and Trusts created prior to 2012 obsolete, the law did change terminology (Executors are now called Personal Representatives) and also gave us the opportunity to streamline and customize in many respects the way Wills and Trusts are administered after death. If you have estate plan documents that were created before 2012, it is a good idea to have those documents reviewed, and consider updating them to include some of the new administrative provisions that will make things easier for your fiduciaries and your heirs after your death. While you are at it, you can also include digital estate planning provisions that give your fiduciaries necessary authority to deal with your digital assets (email accounts, photo storage accounts, social media, online banking, etc.) if you become incapacitated or pass away. This will protect your fiduciaries from running afoul of federal “hacking” laws that do not look kindly on unauthorized access to online accounts, even if the person has your username and password.

You have Significant Wealth in Retirement Plans

An important estate planning concept to understand is that your Will and Trust do not necessarily control all of the assets you own at your death. First, assets that have beneficiary designations – such as life insurance policies, annuities, and retirement accounts (IRA, 401k) – will be paid to the beneficiary you have designated at your death, regardless of the provisions of your Will or Trust. For this reason, a crucial part of a comprehensive estate plan is to carefully review how beneficiaries are designated on these types of assets, and be thoughtful about making any necessary changes. Second, retirement accounts are subject to their own, complicated set of rules regarding how and when distributions from those accounts will be made to the beneficiaries you have designated. These rules are about to change when Congress passes the SECURE Act, which is expected to happen when Congress returns to session in September. If you have significant assets in a retirement account, you should understand how these new rules will impact the distribution of these funds to your beneficiaries, and if necessary, make appropriate plans to manage those accounts for those who may not be capable of managing that wealth on their own, with an eye towards minimizing the income tax that will be payable on those distributions. Finally, keep in mind that these assets are still considered part of your estate for estate tax purposes. The estate tax provisions of your Will and Trust will need to specify whether the recipient(s) of those assets, if different (or in different proportions) from the beneficiaries of the assets controlled by your Will and Trust, will pay their share of the estate tax in proportion to what they receive.

You are Concerned about the Cost of Long-Term Care

Estate and tax planning can be inconsistent with long-term care planning. The estate plan you created 15 or 20 years ago when your family was young is most likely no longer adequate for the issues your estate plan should address as you age. It is important to get educated about issues relating to long-term care while you are still healthy and able to take whatever long-term care planning steps may be necessary. An experienced estate planning and elder law attorney can help you think through questions like – What is your plan if you or your spouse need care? Do you intend to stay in your home? If so, how should it be owned? Do you intend to move to a different state to be near children, or to a CCRC? Do you have or should you look into purchasing long-term care insurance? Will you be or do you wish to be eligible for public benefits to pay for long-term care? Are there planning steps you should take now to position yourself to be eligible in the future? What will public benefits pay for and what won’t they pay for, and is eligibility for those benefits the best planning strategy? Depending on your answers to these questions, your estate plan can be updated to plan appropriate for your future. In addition to these issues, the importance of a good Power of Attorney (for financial decision-making) and updated health care documents (such as a Health Care Proxy) cannot be overstated.

Take the time to consider whether your estate plan is due for a review and update. If you have never created an estate plan, now’s the time! Put your mind at ease, cross this important item off the “to do” list, and contact an experienced estate planning attorney today to get the process started! You will be glad you did.

September, 2019

Smart Counsel,
For Life

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

The Do’s and Don’ts of Estate Planning According to the Movie Knives Out

Five Taxes your Heirs May Pay (or not) After your Death

“I Just Need a Will”

Five Important Numbers to Know for Long-Term Medicaid Benefits

In Estate Planning, Preparation Is Key

Estate Planning and Taxes – Five Things to Know About Taxes After Death

What do you want your estate plan to say?

5 Things to Consider Before Getting Hit by the Bus

Planning Now For Long-Term Care After Incapacity

Five Reasons to Review Your Estate Plan

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

Let’s Work Together

Tell us how we can help

Latest Posts

'.$name.'

Smart Counsel, For Life

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

Articles and Blogs

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

Let’s Work Together

Tell us how we can help

Footer

Latest Posts

Smart Counsel,
For Life