Think about everything you own – perhaps you have personal possessions, savings bonds, real estate, life insurance, and financial accounts such as checking and savings, investment, and retirement accounts. Your physical personal possessions, such as your vehicles, furniture, clothing, jewelry, artwork, boats, collectibles, and other items are known as your “tangible personal property”.

Some tangible personal property is financially valuable – consider the countless stories you hear of a person discovering that the painting she bought at a garage sale is worth millions.

However, often the most significant value of tangible personal property is its sentimentalmeaning to you and your family. For example, your mother’s costume jewelry which you remember seeing her wear during special occasions. If you have siblings or other family who have similar emotions and memories attached to the same item, tangible personal property can quickly become a source of serious conflict between family members after death.

To avoid conflict that will damage the relationships between your surviving family members, speak with a qualified estate planning attorney to determine how you may best direct the distribution of your tangible personal property. One option is to identify and direct what happens with a specific item in your Will (and/or Trust). For example, the Will can state that your $3,000 statue is to be sold and the sale proceeds distributed equally among your children after your death. However, you must carefully consider whether disposing of your tangible personal property in your Will makes sense. If you later decide the statue should instead be distributed to your daughter, you will need to change your Will which will involve another trip to your lawyer’s office and another fee to make that change.

The better option is often to list specific items and their recipients on a tangible personal property memorandum. Under Massachusetts law, a memorandum that is incorporated by reference in the Will is legally enforceable even though it is a separate document from your Will and one that you can change on your own at any time. For instance, if you later prefer the statue to be distributed to your son instead of your daughter, you may update the memorandum yourself without the time and expense of changing your Will.

A third option is to distribute specific items of tangible personal property to the family member you wish to receive it while you are alive. Before doing this, consider whether you will miss the item, whether other family members will dispute that gift after your death (in which case you should document the transfer in writing), and whether you will be upset should the recipient decide to sell it or give it to someone else without consulting you.

Beyond the specific items you wish to distribute to certain recipients, it is important that your Will also describe what happens to all your other tangible personal property. For example, the Will may state that your other tangible personal property is to be distributed equally among your children. If your children do not want your remaining tangible personal property, your Will may direct your Personal Representative (Executor) to sell it, donate it to charity, and/or otherwise dispose of your tangible personal property.

A little inheritance planning goes a long way, especially after you are gone. At Samuel, Sayward and Baler LLC, we recognize the importance of maintaining family relationships, and look forward to tailoring your estate plan to fit your tangible personal property distribution wishes now and for the future.

May, 2019      

© 2019 Samuel, Sayward & Baler LLC

As an estate planning attorney, I see a lot of clients who try to take matters into their own hands to save money, time or both.  I also see the unfortunate estate planning missteps and the results, including the time, cost and effort required to correct the mistakes that could have been easily avoided by seeking legal advice from an experienced lawyer.  Here are a few things to avoid on your way to an appointment with a qualified estate planning attorney to discuss your own estate plan, and a couple of others to keep in mind once you get there.

1. Naming Minors as Beneficiaries.  Beneficiary designations are a convenient way to avoid probate and make sure an asset is paid directly to your chosen beneficiary at death.  You can name a beneficiary on your life insurance policy or retirement account. Many states (including Massachusetts) now permit you to designate a beneficiary on your bank account or investment account.  Many well-meaning parents and grandparents designate their children or grandchildren as beneficiaries of any or all of these types of assets. However, a minor (under the age of 18 in Massachusetts) is not legally able to own an asset.  This means that the financial institution involved (the bank, insurance company, or IRA custodian) will not simply name the minor child or grandchild as the new owner of the account following the original account owner’s death. And this is where the fun begins.  A conservator must be appointed by the Court to receive the asset on behalf of the minor child, and must hold that asset for the minor’s benefit until he or she is 18. The conservator will need to file annual accountings with the Court reflecting the activity in the account, and how any funds in the account were used for the minor’s benefit, until age 18.  The time, effort and expense involved in this process is significant, and unnecessary. In addition, an 18-year-old should probably not have control of significant assets anyway. Leaving your assets to a trust for the benefit of minors or young adults, rather than naming them directly as beneficiary, is usually the better solution, and an attorney who prepares wills and trusts can help guide in preparing a trust appropriate for your situation. 
2. Drafting Your Own Will.  Some people are disappointed to learn that the days of the $100 Will are behind us.  In an attempt to save the legal fees required for an experienced estate planner to draft a Will for them, those same people take to the Internet and draft the document themselves.  I have seen many of these home-grown Wills over the years, most with the same issues – ambiguous and/or conflicting provisions, an absence of administrative provisions specific to Massachusetts law that will allow the administration of the estate to go smoothly and cost-efficiently, and improperly executed documents.  When it comes time to probate one of these Wills after death, all of the money saved up front and more is spent on legal fees trying to resolve the ambiguities and deal with the Court on administrative matters that could have been avoided with proper administrative provisions in the document. I have also seen situations where the so-called “Will” is found to be invalid. For these reasons, doing a Will yourself can be risky business, and is best done by an attorney experienced in Will drafting. 
3. Adding Joint Owners to Bank Accounts Without Due Consideration of the Consequences.  Adding a child’s name to your bank account is a way to give your child convenient access to the account.  The child can run to the bank and get cash for you, sign checks if you are in the hospital, or have ready access to the account to pay post-death expenses.  I am not opposed to this arrangement for small accounts where convenience really is the objective. However, keep in mind that your child is considered the owner of any account on which his or her name appears.  If that child is sued, gets divorced, files for bankruptcy, or encounters other liabilities, that account is considered the child’s asset, and could be reached and the funds taken by a child’s creditor. Joint ownership of accounts can also become an issue after death if your Will does not clearly state what your intention is regarding that account – do you want the funds remaining in the account to belong to the child, or do you want those funds divided equally between all of your children? These are important legacy planning questions that an attorney can help you answer. If your wishes are unclear, the bad feelings and disagreements that result are magnified by the size of the account. All of these issues can be resolved with thoughtful estate planning that includes a power of attorney and/or trust planning, which will allow access to your account by others when needed and division of the account after death consistent with your wishes. 
4. Failing to Fund Your Trust.  If you have a trust, don’t forget to fund it.  Funding your trust means changing the ownership of assets so that those assets are owned by your trust or designate the trust as beneficiary.  When your trust is properly funded, the assets funding the trust will avoid a probate proceeding at your death. If your trust includes estate tax planning provisions, the assets will be sheltered from estate tax at death.  Funding a trust is something that must be done before you die. Once you are no longer with us, the benefits of funding the trust are lost, and probate and taxes cannot be avoided. This is not to say that you should fund your trust willy nilly with any and all assets.  The estate planning attorney who drafted your trust for you should provide you with written trust funding instructions consistent with the goals of your estate plan. Make sure you follow those instructions. If it has been a while since your trust funding was reviewed, and you have acquired additional assets or your goals have changed, sit down with your estate planning attorney again, review your trust funding, and confirm the instructions before proceeding to fund that trust! 
5. Choosing Co-Fiduciaries Unwisely.  Despite every parent’s hope that their children are life-long friends, some siblings just don’t get along. As a parent, it is important to recognize your children’s strengths and weaknesses, and be realistic about their relationship with each other and their ability to work together when deciding who will make financial decisions for you under your Power of Attorney, health care decisions for you under your Health Care Proxy, and who will settle your estate as Executor of your Will or Trustee of your Trust.  These positions are important jobs that will impact you during your lifetime, and impact people you care about after your death. If you name two people who don’t get along or trust each other a job to do together, things will take longer and cost more than they should as the two parties check up on each other, question every action taken by the other, and delay dealing with what needs to be done because the process is so painful. Do yourself and your family a favor and choose your fiduciaries wisely. Don’t worry about birth order or bruised egos.  Choose the person or persons you know will do the job well and treat everyone fairly.

Keep these things in mind when thinking about your own estate plan, and hopefully implementing it with the advice and assistance of an experienced estate planning attorney, who can help you avoid these estate planning don’ts.

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.

May, 2019      

© 2019 Samuel, Sayward & Baler LLC

By Kevin Cotton and Steven Joshua Samuel, JD, MBA, AIF® Roth IRA accounts allow a taxpayer to contribute after tax money to an account which is never taxed again. The popularity of Roth accounts has grown and presents unique opportunities for retirement and for supercharging bequests to family or friends after the lifetime of the original owner. Converting Pre-tax Assets Eliminates Future Taxation Some people are fortunate enough to accumulate amounts of money in retirement that are more than enough for their own spending needs. For those taxpayers, converting some of the assets from a traditional IRA to a Roth IRA offers major advantages. Conversions to Roth IRAs are most commonly done with traditional IRA assets, but some 401(k) and other employer sponsored retirement plans even allow for “In-Plan” conversions. Converting money in a traditional IRA to a Roth IRA does require payment of income taxes. However, paying taxes upfront allows assets to then grow tax-free forever.  And, the Internal Revenue Code does not require minimum distributions at age 70.5 from Roth IRAs as it does from traditional pre-tax accounts. It is best to pay the tax using cash not in the traditional IRA for two reasons:

1. So that the entire pre-tax balance is converted, ultimately increasing the after-tax value.
2. To avoid the early withdrawal penalty on taxes paid from the Traditional IRA when the IRA owner is under age 59 ½ at the time of the conversion.

For taxpayers who intend to pass gifts to future generations, a Roth IRA can magnify the gift. Magnifying Gifts to Future Generations with Roth IRAs Roth accounts (or converting traditional IRAs to Roth) can be very effective as an estate planning and wealth transfer tool, especially if gifts to younger people are important goals. Since Roth IRAs do not require owners to take required minimum distributions, the account balance will continue growing and can ultimately result in a much higher balance being transferred to the named beneficiary after the original owner’s death. When a Roth is transferred to a younger beneficiary at death, the Roth becomes the beneficiary’s account. Some factors make the inherited account extremely valuable. Withdrawals from inherited Roth accounts are always free of penalty and are generally tax-free to the beneficiaries. Please note that inherited Roth IRA distributions may be subject to tax if it has been less than 5 years since the original Roth IRA owner funded his or her first Roth IRA. Although required minimum distributions do not apply to original owners of Roth accounts, they do apply to inherited accounts. However, required distributions are taken based on the heir’s life expectancy rather than the original owner’s life expectancy. For this reason, younger people will ultimately have a much higher balance inside the Roth, growing tax-free forever. Two examples of the magnifying effect of gifting a Roth IRA to a younger person follow below. Real Life Scenarios Bob, age 65, is considering leaving his $50,000 traditional IRA to his daughter, Jane, or grandson, Jack. He wants to know whether converting his traditional IRA to a Roth and paying the taxes on the conversion is a better idea. If Bob chooses the Roth conversion, he will pay the necessary tax with money outside of the IRA so that the full $50,000 balance is converted. This will cost Bob anywhere from $5-15,000 depending on his tax bracket, but see below for how well the Roth rewards that sacrifice. Scenario 1:

• Assuming a 6% annual growth rate, the $50,000 Roth account balance grows tax-free (without required distributions) to approximately $127,021 at the time of Bob’s death at age 80.

• Compare the Roth total of $127,021 with what would happen without the Roth conversion. The traditional IRA requires distributions starting in the year Bob turns 70.5 and would grow to only approximately $79,500 at the time of Bob’s death at age 80.

• Jane inherits the $127,021 Roth account at age 45. Jane now enjoys tax-free growth and is only required to take out small annual required distributions based on her longer life expectancy.

• Jane sees the inherited assets as additional retirement savings and lets the balance grow. At age 65, the Roth account grows to approximately $200,909, compared to only $125,746 if Jane had inherited a traditional IRA.

Scenario 2:

• Assuming a 6% annual growth rate, the Roth account balance grows tax-free (without required distributions) to approximately $94,917 at the time of Bob’s death at age 75. The similar traditional IRA requires distributions starting in the year that Bob turns 70.5 and grows to approximately $75,392 at the time of Bob’s death at age 75.

• Jack inherits the $94,917 Roth account at age 10. Jack now enjoys tax-free growth and is only required to take out small annual required distributions based on his longer life expectancy.

• Jack sees two possible uses for the inherited assets: college expenses and the purchase of a home:

• At age 18 and assuming a 6% annual growth rate, the Roth account grows to approximately $129,373, compared to only $102,763 for the similar inherited traditional IRA

• At age 40 and assuming a 6% annual growth rate, the Roth account grows to approximately $312,907, compared to only $248,541 for the similar inherited traditional IRA

Notes: The above estimates assume 6% annual growth, 25% total taxation on all withdrawals, 15% total taxation on investments, and that RMDs are taken at the end of each year. These are hypothetical examples and are for illustrative purposes only.  Actual performance and results will vary. As the figures show, using Roth assets as a wealth transfer tool can be a very effective way to increase the value of a gift over time to a younger beneficiary. Since the inherited account does not have restrictions on withdrawals, the increased value can be a useful source of funds for various important goals in a beneficiary’s life. As always, consult a trusted financial advisor before implementing investment strategies. Samuel Financial LLC is located at 858 Washington Street, Dedham, MA 02026 and can be reached at 781.461.6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser. Fixed Insurance products and services offered through CES Insurance Agency.

Q:        My daughter told me that she can get a Will form off the internet that I can fill out and that way I will avoid an expensive legal fee.  If I have a pretty simple situation is there any reason why I shouldn’t do this? A:        Yes!  There are many reasons why you should not use a Will form from off the internet, just like there are many reasons why you should not do your own dental work!  Here are just a few:

• Most situations are not simple.   Many clients who come to see me tell me at the outset that their situation is simple, but as we talk, it often turns out that things are not quite so simple. Common circumstances which merit more than a simple Will include
  • a child or grandchild with special needs
  • a child who is in a shaky marriage or has money troubles
  • a desire to protect assets from long term care costs
  • a second marriage, especially where there are children
  • having a taxable estate
  • ownership of a family business, commercial real estate or a beloved vacation home

• Language is important.  The wording in your Will determines how your estate will be distributed.  If your Will says, ‘I leave everything to my children in equal shares’ what happens if a child predeceases you?  Will his share go to his children or will it be distributed among your other children?  What do you want to have happen?  Engaging an estate planning attorney to prepare your Will means that your intentions will be carried out, and that there will be no ambiguity that could lead to family disputes or unnecessary court involvement after your death.

• Most people need more than just a Will.  While having a Will is important, creating documents to address the possibility that you may experience a period of incapacity in your life is just as important.  These documents include a durable Power of Attorney, a Health Care Proxy, HIPAA Authorization and a Living Will.

In many ways your Will is your legacy to your family; it is the last thing you say to your loved ones.  A well-planned estate, including a Will prepared by an experienced estate planning attorney for your unique situation, tells your family that you care enough about them to ensure that your intentions are carried out effectively and in the most cost-effective manner possible. Call us – we can help you ensure that your wishes are carried out.

There’s a popular saying attributed to Benjamin Franklin that goes, “Failing to plan is planning to fail”.  The truth of this adage is well illustrated by two recent Massachusetts cases that highlight some of the unfortunate consequences of poor Estate Planning. In the first case, a man (Raymond) who married for the second time late in life failed to properly take the trust and estate planning steps to ensure that his wishes for the disposition of his property between his second wife (Susan) and his four children from a prior marriage were achieved.  The result of Raymond’s failure to plan was contentious (and no doubt expensive) ligation between Susan and the four children after his death.  The issue in the case of  Ciani v. McGrath arose out of a Massachusetts law that effectively prevents someone from disinheriting his or her spouse if that spouse does not want to be disinherited.  Because Raymond failed to properly plan, this law gave Susan the ability to force a sale of Raymond’s real estate when he passed away and to take one-third of the sale proceeds for herself.  It did not matter that Raymond had owned the property for many years before his marriage to Susan (he bought it with his first, late wife) or that Susan and Raymond had only been married for two years when Raymond passed away. This result could have been avoided if Raymond and Susan had entered into a prenuptial agreement before their marriage in which they had agreed upon the disposition of their assets at death.  Even without a prenuptial agreement, Raymond could have avoided this result by, for example, leaving assets in trust for Susan during her lifetime.  A properly planned Trust can avoid these type of issues. The Trust could have provided that upon Susan’s death, the Trust assets would be distributed to Raymond’s children.  Instead, Raymond’s intentions for the distribution of his estate were not carried out (if you assume his Will represented his wishes) and his family was left with an acrimonious lawsuit.  One-third of the property that Raymond intended pass to his children will instead be distributed to Susan, and to her beneficiaries at her death. The second situation is even sadder.  When Richlene married Noel Aimes she already had a daughter, Marcelle.  In 1980, Richlene and Noel bought a house together in Somerville for $23,000 where they lived with Marcelle and other of Richlene’s family members until Richlene, then Noel died. Noel never had children of his own.  When Richlene died, Noel became the sole owner of the home since they took title to the property as husband and wife, tenants by the entirety.  When Noel died two years later without a Will, the Somerville property, now worth $1 million, passed to his heirs-at-law as determined under the Massachusetts intestate statute which does not recognize step-children as heirs. As such, Marcelle, who has lived in the property for almost 30 years, has no legal right to ownership or occupancy. Instead title to the house passes to Noel’s nieces and nephews with whom he apparently had no relationship.  Had Noel made a Will or added Marcelle’s name to the title of the property, the property would have passed in accordance with what everyone believes would have been Noels’ wishes – to Marcelle. Here’s another pearl of wisdom from our pal Ben, “Well done is better than well said.”   Plan now to speak with an attorney for wills and trusts to make sure your family isn’t sorry later.

Life insurance companies are giving away free Apple Watches to people who share fitness data with them and meet their fitness goals.  New York state is allowing life insurance companies to scroll through your pictures on Instagram to determine your premiums.  The digital age has makes it possible to decrease premiums by installing fitness apps and posting pictures of yourself running. When thinking about life insurance as your family grows or your term life insurance expires, you will want to keep the following five things in mind as you consider the implications of life insurance on your estate plan. What is life insurance? Life insurance provides a payout after your death (called a death benefit) to the people you designate as beneficiaries. It is an important safety net if anyone depends on you financially. Life insurance benefits can pay debts such as mortgages, replace your income and provide funds to pay college tuition. Life insurance can provide for dependents such as children or a younger spouse.  It can help a business owner buy out the interest of a deceased business partner. Is group life insurance enough? Free life insurance at work is a great benefit. You sign up, and your employer pays.  More Americans are covered by work-based life insurance than by policies they purchase outside work. Most people rarely revisit their life insurance needs. Free coverage is typically one to two times your annual salary. However, you may want to replace more than two years of income upon your death.  Our firm does not advise clients as to the amount of insurance to obtain, but we work with financial advisors to make sure that ownership and beneficiary designations for insurance policies are in line with your estate plan.  If you have questions about your life insurance, speak with a financial advisor as to whether work coverage is sufficient depending on your goals to align with your estate planning needs. Are your life insurance policies taxable? This is an important question to ask when preparing an estate plan. Beneficiaries do not have to pay income tax on death benefits they receive. However, proceeds of insurance policies are subject to estate tax upon your death if you control the policy – that is, if you can cancel, surrender, or assign the policy or change the policy’s beneficiary.  When life insurance proceeds are payable to your spouse, a marital deduction will apply.  However, if the proceeds are payable to children or others, an estate tax may be due.  As an example, if my sister designates me as beneficiary of a policy with a $50,000 death benefit, I will not pay income tax on the proceeds, but the $50,000 proceeds will be included in my sister’s estate for purposes of calculating the estate tax payable by her estate at her death. It is important to consider. What can you do to avoid estate tax on life insurance? Life insurance proceeds can escape estate tax if you transfer the policy to an irrevocable life insurance trust.  Once the trust owns the policy, you cannot get it back or make changes to the provisions of the trust that will specify how the death benefit will be distributed at your death.  Also, you cannot be the Trustee of an Irrevocable Trust that owns a policy insuring your life. If you transfer an irrevocable policy to a trust but die within three years of the transfer, you lose the estate tax break, but if you create an irrevocable trust and the trust buys a new policy, the three-year rule does not apply. What is the catch? The irrevocable trust as the policy owner must pay premiums. You cannot pay premiums directly but may make gifts to the trust.  The Trustee must give the beneficiaries notice of their right to withdraw amounts contributed to the trust so they qualify as present gifts.  These notices, called Crummey notices, are named after a court case that fleshed out these requirements and allow the contributions to qualify for the annual gift tax exclusion, relieving you of the need to file gift tax returns. If you have purchased a life insurance policy or are contemplating purchasing a policy and would like to structure ownership to decrease the estate tax owed at your death, contact an estate planning attorney with experience in drafting and administering irrevocable life insurance trusts. Natalene Ong, Esq. is an estate planning attorney at Samuel, Sayward & Baler LLC, a law firm that is based in Dedham.  The firm focuses on advising clients in the areas of estate planning, administration of estates and trusts 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. March 2019 © 2019 Samuel, Sayward & Baler LLC

In the year and a half since I last wrote about planning for digital assets not much has changed in Massachusetts.  Our state is still one of a handful of states that has not enacted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), although there is a bill pending in the Massachusetts legislature that would do so.  This bill would clarify the authority your appointed fiduciaries (such as your agent under your Power of Attorney, or the Personal Representative of your estate) would have to access your digital assets if you become incapacitated or pass away.

What has changed in the past year and a half is that we all continue to be more dependent upon technology, and our digital footprint increases with each passing day.  We continue to use social media, online photo and document storage, and email on a daily basis, increasing the digital “assets” we have stored in these accounts.  The importance of the assets stored online has also increased – perhaps this is the only place you now store vacation photos (rather than putting them in your photo album), or perhaps you only receive your bank or investment account statements online rather than in the mail. This online footprint will only continue to grow, as will the need for your estate plan to address your digital assets.

The more digital assets become mainstream, the more important it is to plan for access to these assets by others if you are not able to do so. To the extent these accounts contain information that you would like someone to be able to access after your death or incapacity, it is necessary to provide the appropriate authority for such access as well as instructions about what you want done with these “assets.”  For some types of these assets, digital estate planning strategies are is crucial to prevent financial loss (i.e. the loss of a domain name used for business purposes, bill payment, access to investment account information), to protect sensitive personal information (on-line dating websites), to avoid identity theft, and to allow access to valuable assets (think bitcoin or an author’s manuscript).

Here are some tips to manage your digital assets until Massachusetts law catches up with the rest of the country and we have a clear roadmap for access for Massachusetts fiduciaries:

• Review the terms of service agreements for the online accounts you use. Understand what those agreements provide about access, and if and how others can be given permission to access your account. Have a qualified estate planning attorney review these on your behalf if you have questions.
• If an online entity offers a way for you to give permission or access to your digital assets stored with that company, pay attention and follow the directions. For example, Facebook allows you to designate a Legacy Contact who can manage your account after you die, or you can choose to have your account deleted if you pass away. Google allows you to control what happens to your account through their Inactive Account Manager feature. Here you can designate when your account will be considered inactive, what should happen to your Google account in that event, and designate one or more people who will have access to whatever portions of your Google account you choose.
• Update your estate plan documents, specifically your Power of Attorney, Will and Trust, to ensure those documents grant express permission for the fiduciaries named in those documents to access your digital assets, and express direction regarding what should be done with specific digital assets at death. In our office, we include express permission for access in these documents.
• Keep a current list of your usernames and passwords in an online password manager or recorded in another way where a trusted person can access this information if needed, and let that person know where this information is located. As a start, we provide our clients with a Digital Assets Memorandum that can be used to record access information and instructions about digital assets.

Keep in mind that if you have not used an online entity’s prescribed method of giving someone permission to access your account, and do not have express permission and direction in your estate plan documents, the company’s Terms of Service Agreement will govern. In such a case, you and your digital assets are at the mercy of the online provider, which may not allow access following your death or incapacity. Don’t fail your loved ones with poor digital legacy planning.

March 2019

© 2019 Samuel, Sayward & Baler LLC

You may be asking yourself “What is a Continuing Care Retirement Community?” A Continuing Care Retirement Community (CCRC) is a community that consists of graduated levels of residential and health care options to accommodate elders who are looking to downsize but remain independent and ensure that their health care needs are met as they “age in place” in a familiar setting. Generally, a couple or single person’s financial and health eligibility are rigorously reviewed by the CCRC and a signed agreement outlining the terms of residency, services, fees, transfers between types of residency units, and other matters (Agreement), along with a large Entrance Fee deposit (similar to a security deposit from renters), are required to join a CCRC. Here are five things to consider if you are contemplating moving to a CCRC.

1. How are CCRCs Regulated?

There are currently about 30 CCRCs throughout the Commonwealth of Massachusetts. Under Massachusetts’ consumer protection law (G.L.c. 93, §76), CCRCs are required to disclose specific information regarding the terms of residency and services prior to or at the time the Agreement is signed or a deposit is paid, and to provide the same to the Executive Office of Elder Affairs (EOEA), which had made several CCRCs’  Agreements and other information available here. If a CCRC knowingly and willfully fails to disclose this information, the resident may recover damages, costs and attorneys’ fees, and in certain cases, a refund of the Entrance Fee, sometimes less certain costs outlined in the Agreement. However, in Massachusetts there is no state agency that has authority to oversee and enforce the CCRCs’ adherence to the statute.

2. I Meet the CCRC’s Financial Requirements – Does It Meet Mine?

Typically, a large Entrance Fee deposit is required to buy in to a CCRC, and each CCRC treats the manner by which the Entrance Fee may be utilized during your lifetime and the process by which it is refunded differently.  For instance, some Agreements state that the Entrance Fee may be used by the CCRC to pay your monthly expenses if your other methods of payment have been exhausted. Other Agreements state that you, or your family if you are deceased, will not receive a refund until a new resident buys in to the CCRC, unless you are willing to receive a greatly reduced refund. Yet other Agreements may link the Entrance Fee refund to your period of residency, which means the refund may be significantly less than the deposit you paid if you reside there for several years. Carefully consider the Entrance Fee refund provisions and decide if they are acceptable to you and your family when reviewing an Agreement.

Also pay attention to the financial strength of the company that supports the CCRC, especially if the Agreement makes it clear that your receipt of a refund is dependent upon the buy in of a future resident.  If the company declares bankruptcy, you may lose your entire refund.   The Commission on Accreditation of Rehabilitation Facilities (CARF) is a nonprofit accreditor of health and human services providers and provides a Guide to Understanding Financial Performance and Reporting in CCRCs on its website.

Another matter to consider is what happens if you no longer have adequate funds to pay your monthly expenses, especially if you are in the skilled nursing facility section of the CCRC. Carefully review the Agreement to determine if there are terms that explain the procedure by the CCRC to collaborate with you to pay your expenses, including applying for Medicaid benefits.  Most CCRCs do not accept Medicaid.

3. What Are the Monthly (and Other) Fees I Will Pay?

The CCRC should provide you with a detailed written description of the services included with the monthly fee you will be paying them as well as a list of fees for additional services.  For example, is transportation to local grocery stores, laundry services or light cleaning of your unit included in the monthly fee or are these additional fees? It’s a good idea to calculate the fees for the additional services you anticipate utilizing along with the monthly fees you will be paying.  Be aware that these fees generally increase annually.

4. What Happens If My Health Declines?

The major appeal of CCRCs is that you can remain within a familiar community that provides more residential and health care support if and when your health declines. Many Agreements include provisions that broadly describe the process, factors and decision-makers that influence when you may be temporarily or permanently transferred from an independent living unit to an assisted living unit or a skilled nursing facility unit or to another facility outside of the community if warranted. Some Agreements permit residents or their legal representatives to weigh in and appeal the decision to permanently transfer the resident to another unit while others do not. A move to assisted living or skilled nursing can significantly increase your monthly expenses.  Additionally, the decision to permanently move you to a potentially more expensive unit may be out of your hands.  Carefully consider the factors and individuals involved in deciding if you require transfer to another unit, and note whether the Agreement clearly explains the fees if your healthy spouse remains in your independent living unit.

5. What Else Is Important to Me?

Arbitration: Another part of a CCRC Agreement to consider is the arbitration/dispute resolution provision. Some Agreements state that any disagreement you have with the CCRC may only be resolved with arbitration and/or dispute resolution and not via the court.  This will limit your ability to pursue an outcome that may be more beneficial to you. Consider carefully if it is important to you to have all legal options available to you in the event the CCRC violates its Agreement with you.

Resident Rights: Beyond any rights described in the Agreement, residents may establish a residents’ association, submit comments to the CCRC regarding resident health and welfare, and request information about construction and the financial reserves of the CCRC under Massachusetts law. Think carefully about whether you will be comfortable with a limited ability to effect change within your community as a resident. Also keep in mind that you will be sharing common space with people that have different lifestyles from you; for instance, would you be bothered if your neighbor smokes cigarettes or has a noisy pet?

Activities: Review the activities, events and meal schedules of the CCRC and consider whether they appeal to you and fit your lifestyle.

For more information, an extensive consumer guide to questions and other topics for consideration regarding Massachusetts CCRCs can be found at the EOEA’s website.

If you are considering making a Massachusetts CCRC your future home and wish to better understand the terms and legal ramifications of the Agreement for you and your loved ones, contact an experienced elder law attorney to thoroughly review and discuss the Agreement with 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. 

February, 2019

© 2019 Samuel, Sayward & Baler LLC

In February, you’ll get tax forms – use them as an estate planning checklist for reviewing beneficiary designations.

By February 15, financial institutions will have sent you all the forms needed for your tax returns.  This nifty pile can help you review your beneficiary designations to make sure they are up-to-date. Beneficiary designations determine how retirement plans and life insurance proceeds will be distributed at death. Brokerage and bank accounts may also have beneficiary designations. Out of date designations may mean that assets go to the wrong people, and that’s just bad estate planning. You designated beneficiaries when you enrolled in your retirement plan. You may have filled out POD (payable on death) or TOD (transfer on death) forms when you opened investment or bank accounts.  Things to keep in mind in reviewing beneficiary designations are:

Your Designations May Be Wrong.  Life brings change, so it is wise to review your beneficiary designations and change them as needed.  Rules for retirement plans and remarriage are complex, and when the companies managing your assets merge, beneficiary designations may not transfer.  Review your designations when your marital status changes and when the institutions in charge of your assets change. Name contingent beneficiaries to receive assets in case primary beneficiaries do not survive.  Otherwise, these assets will need to be probated.

When providing for children or grandchildren, be thoughtful about the type of assets to leave them and the manner in which the assets will be distributed.  Do not name a minor as beneficiary.  Also, be cautious about naming a young adult as a beneficiary. Instead, create a trust for their benefit and name the trust as beneficiary.  Then, you can control when the child or grandchild can access funds. Contact a lawyer for wills and trust to discuss the right strategy for your children.

If a loved one has become disabled, you will want to change your designations to assure that you do not jeopardize that person’s eligibility for Social Security Supplemental Security Income (SSI). SSI provides income and Medicaid insurance to disabled people with less than $2,000 ($3,000 for a couple) in “countable resources.”  Inherited assets will be “countable resources” and jeopardize eligibility for benefits.  Instead, create a Special Needs Trust for the benefit of your disabled loved one and designate the trust as the beneficiary.

Your Designations Can Save Taxes. Retirement assets paid to an estate must be paid out within 5 years of death rather than over a named beneficiary’s lifetime. Name beneficiaries to save taxes! Life Insurance owned by a Life Insurance Trust can remove that asset from your taxable estate.  Finally, you can rollover or distribute your required minimum distribution to a charity and save income tax during life.

Your Estate Plan Needs Annual Exams.  Even if life has not handed you major change, review your beneficiary designations and make sure your loved ones know where to find important estate planning documents. Keep copies of your 1099 tax forms and use the contact information on the forms to call your financial institutions and check your designations.  Remember where you put your important documents and create a list for your family.

February, 2019

© 2019 Samuel, Sayward & Baler LLC

The approach of Valentine’s Day and the recent announcement by Jeff Bezos, founder of Amazon, that he and his wife are ending their marriage after 25 years, set me thinking about how divorce impacts a person’s estate plan (especially in high net worth couples).  Here are five ways that divorce can impact an estate plan and actions that should be taken to address that impact on your legacy planning.

1. Update your Beneficiary Designations. One of the first things people think about when they split up with their spouse is that they need to change their Will to remove their soon-to-be ex-spouse as a beneficiary of their Will.  What is sometimes overlooked is updating beneficiary designations on assets such as retirement accounts, life insurance policies and annuities.  While Massachusetts has a statute (MGL c 190B § 2-804) which provides that a divorce revokes a beneficial designation made in favor of a former spouse unless the designation was made pursuant to the divorce, the law also states that if a financial company is not properly notified of the divorce and it makes a distribution to the former spouse then the company cannot be held liable.  Keep in mind that changes to assets, including beneficiary designations, may not be permissible while a divorce is pending but should be addressed as soon as the divorce is final.
2. Avoid Probate to Avoid Prying. Probate is a public proceeding.  One of the requirements of probate is that notice of the filing be published in a newspaper local to the town in which the decedent lived at the time of death.  The purpose of this notice is to alert anyone who wants to make a claim against the estate that they have a limited amount of time to do so.  It is also an invitation to the nosy to snoop or to the vindictive to cause trouble.  Sadly, when love goes bad vengeance can be a byproduct.  Wreaking havoc with a probate estate is not that hard.  Even if a claimant does not have a valid claim, the prospect of prolonged delay and costs can motivate the Personal Representative of the estate to offer something in settlement.  However, if there is no need to file for probate this can be avoided.  When no probate is needed there is no publication in the local newspaper and there is no matter pending in the probate court for someone to meddle with.
3. Follow through on Deed Changes. When a married couple divorces the disposition of their jointly owned real estate is determined as part of the divorce.  Sometimes the property is sold, but often the property will be retained by one of the parties.  Although a divorce will sever a tenancy by entirety and a divorce agreement, or order of the court on file in the probate court will determine the title, it is still advisable to actually have a new deed signed conveying the property into the name of the spouse who is retaining it.  It is surprising to me how often divorced clients do not take this last step.  Good estate planning advice is that no matter how sick and tired you are of dealing with your soon to be ex-spouse, don’t walk away until the i’s are dotted and the t’s’ are crossed and that new deed putting the house in your name is signed and filed with the Registry of Deeds.
4. Create a Trust for Minor Children. Even though your Ex is no longer your spouse, he or she is still the parent of your children.  In the event you die while you have a minor child, your former spouse is likely to have custody of the children.  In addition, your former spouse will have control over your minor child’s assets.  That means if you die without a Will, or if you have a Will leaving your estate to your children, it will be your ex-spouse who will have control and custody of your assets that pass to your children until they turn 18.  The same is true if you name minor children as the beneficiaries of your life insurance and retirement accounts – those assets will be in the control of your former spouse.   If this alarms you, speak with a Wills and Trusts lawyer, and create a Trust that leaves your assets to your children via your Trust in which you will designate someone other than your ex-spouse to manage the assets for your children.
5. Update your Power of Attorney and Health Care Proxy. Powers of Attorney and Health Care Proxies are legal documents in which the maker of the document appoints another person to manage financial affairs and make health care decisions in the event the maker is incapacitated.  Most married couples appoint each other to these roles.  However, most people would not want an ex-spouse managing their finances or making nursing home or health care decisions for them.  Even though Massachusetts law automatically revokes those appointments upon divorce, it is prudent to retrieve all copies of those documents that your former spouse, your physician, or a financial institution may possess and to revoke the documents.  Create a new Power of Attorney and Health Care Proxy naming people who you want to assume these roles in the event it is necessary.

With apologies to the J. Geils Band, just because Love Stinks while you’re in the midst of a divorce, your estate plan doesn’t have to.  If you are recently divorced, contact an experienced estate planning attorney to create or update your estate plan so that the people you care about don’t have to suffer the effects of your divorce again should you fall ill or pass away.

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. 

January, 2019

© 2019 Samuel, Sayward & Baler LLC