Articles and Blogs

Five Reasons to Update Your “I Love You” Will

February 10, 2016 by Attorney Maria Baler

In the spirit of Valentine’s Day, our topic for this month is “I Love You” Wills – a Will that leaves everything you own to your spouse outright at your death. This is the most basic form of Will — one that many couples create when they are young and never consider changing. On its face, it appears that there would be nothing wrong with such a simple Will. However, “I Love You” Wills are not appropriate for all couples, and in many cases deprive your spouse and family of the benefits a more sophisticated estate plan can provide.

Here are reasons why your “I Love You” Will may not be the right match for you:

Estate Tax Savings. If you leave all of your assets to your spouse at death, there will be no federal or Massachusetts estate tax payable because of the unlimited estate tax marital deduction available both federally and in Massachusetts. However, upon the surviving spouse’s death, all of the assets will be subject to estate tax. An estate tax will be payable to the Commonwealth if the value of those assets exceeds $1 million. If, instead of leaving all of your assets to your spouse, you left your assets to a properly drafted Trust for your spouse’s benefit, you could shelter up to $1 million of assets from Massachusetts estate tax. For many families, this can save $100,000 or more in estate taxes that your children or heirs would otherwise have to pay at your spouse’s death.

Long-Term Care Planning. If your “I Love You” Will leaves all of your assets to your spouse at your death, those assets (with limited exceptions) will be considered “countable” assets if your spouse requires long-term nursing home care and applies for MassHealth (Medicaid) benefits to pay for that care. A single person can have no more than $2,000 of countable assets in order to qualify for MassHealth. This means your spouse will need to spend down all of those countable assets on his or her care before being eligible for MassHealth benefits. Alternatively, you can create a Will that leaves your assets to a so-called “testamentary trust” for your spouse’s benefit. A properly drafted testamentary trust will allow the trust assets to be used for your spouse’s benefit during your spouse’s lifetime, but those trust assets will not be countable should your spouse require long-term nursing home care after your death. This not only makes qualification for MassHealth benefits easier, but means the trust assets can be used to provide items or services for your spouse that MassHealth does not provide. This may improve the quality of your spouse’s life long after you are gone.

Asset Protection. If your spouse is not experienced at managing money, or if your spouse is among the many people who are vulnerable to spendthrift tendencies or other vices that make it hard for them to hold on to money, an “I Love You” Will is a recipe for disaster. After your death, all of the assets will be in the control of your surviving spouse and will be vulnerable to the survivor’s spending habits and their all-too-frequent trips to Foxwoods. Or perhaps your surviving spouse is just too nice for her own good and would be vulnerable to the pleas of children, grandchildren, or friends who are down on their luck to “loan” funds that are never repaid. Consider whether leaving your assets (or at least a portion of them) in trust for your spouse and naming a Trustee (a responsible family member or friend) to manage money for your spouse may be a better alternative. Your spouse may lose some degree of control, but you can rest easier knowing that assets will be there to meet your spouse’s needs, and that your spouse won’t be the victim of financial exploitation, creditors, or her own spending habits.

Second Marriage – If you are among the lucky ones to have Cupid’s arrow hit home multiple times, an “I Love You” Will is probably inadequate to meet your needs. If you have children from your prior marriage, you may want to leave some or all of your assets to them, and your spouse may want to do the same for his or her children. In such a case, an “I Love You” Will that leaves all of your assets to your surviving spouse is not appropriate even if your spouse promises to leave the assets to your children at her death. The needs of the surviving spouse’s own children, a new spouse, financial exploitation, or long-term care needs can derail even the most sincere of promises, and leave children from a prior marriage with nothing.

Avoiding Probate – Even if you want your surviving spouse to have full control of all of your assets at your death, an “I Love You” Will is a public, costly and time-consuming way to achieve that result. Your Will will be filed with the probate court after your death, and any assets owned by you in your individual name will be subject to a probate proceeding. This process, although effective, can take a year or more to complete and means spending money on attorneys’ fees, publication costs, filing fees, and other expenses. Passing your assets to your intended beneficiaries outside of probate will reduce the time, costs, aggravation and loss of privacy typically associated with the probate process.

If you and your spouse created “I Love You” Wills many years ago, it is definitely time to review them and probably time for a change. Love may be blind, but your estate plan should see you through all of life’s twists and turns. Talk to an experienced estate planning attorney, who can help you create a plan that’s appropriate for your family.

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

February 2016

MassHealth’s Treatment of Irrevocable Income Only Trusts as Murky as Ever

February 3, 2016 by Attorney Pamela Greenfield

Often our clients come to see us to discuss their options for protecting their primary residence should they ever require long-term care in a nursing home. The conversation usually involves a discussion about the pros and cons of a transaction which would protect the home from the placement or collection of a MassHealth lien. As elder law attorneys, we’ve always had a few different tools in our toolbox which would fix the problem of the dreaded MassHealth lien. Whether it was an irrevocable trust, a life estate deed or some other arrangement, there was a fix.

For the last two or three years, the previously well-settled law surrounding irrevocable income only trusts has been under fire by the Office of Medicaid. Although there has been no regulation change or even a court decision carrying true precedential value, the agency has revamped its criteria for reviewing irrevocable income only trusts for individuals applying for nursing home MassHealth benefits. The review standards seem to change daily and the pattern is unnerving—MassHealth denies a trust containing certain provisions one day and approves an identical trust the next. Even worse, the superior courts, historically thought to be a place of refuge from unfair agency decisions, have yet to provide clarification or consistency. Here’s an example—in September 2014, two cases were heard by the exact same superior court judge in Worcester County. The cases were based on the exact same trust and denied by the MassHealth agency for the exact same reasons. The decisions—opposite! In one case the family home was safe and the elder received MassHealth benefits and the other, Roche V. Thorn, is currently on the Massachusetts Appeals Court‘s docket. You couldn’t even write this stuff for an episode of Law & Order! As a result, the current climate makes it very challenging (if not impossible) to effectively prepare these instruments and assure our clients that they will actually be a good fix to the problem of the lien.

So far 2016 does not bring with it any more knowledge or insight into the treatment of irrevocable income only trusts. Late last year, the superior courts handed down the Daley and Nadeau decisions on December 24 and 29, respectively. Both decisions focused on the grantors’ ability to make use of the property held within the trust during their lifetime, although they came at the problem from two different vantage points—one attacking irrevocable trust provisions and the other eluding to the fact that life estate deeds may be problematic (but that’s a whole other blog post!). With the Roche case pending at the Massachusetts Appeal Court and oral argument scheduled for next month, perhaps we will see some clarity later in the year.

For now, we sit in the shop, dusting off some old, less effective tools until we have more information about the future of irrevocable trusts (and, I suppose life estate deeds) in the MassHealth context. Stay tuned and please feel free to give us a call to discuss your personal concerns regarding your irrevocable trust!

February 2016

Health Care Proxies and Hospitalizations

January 8, 2016 by Attorney Maria Baler

A Health Care Proxy is one of the most important estate plan documents you can create. It names an individual to make health care decisions for you in the event a doctor determines that you are unable to make or communicate your own health care decisions. Under those circumstances, the Health Care Agent you name in your Health Care Proxy will step into your shoes and make health care decisions on your behalf. The Agent is required to make decisions based on the agent’s understanding of your wishes.

A Health Care Proxy is crucial in making sure you receive the type of care you want, and that decisions about care, medications, location of treatment, etc. are made by someone you trust and have chosen in advance. If you are unable to make your own health care decisions and you do not have Health Care Proxy, a guardianship proceeding will be required in the Probate Court so that the Court can appoint a legal guardian who will have the authority to make health care decisions for you. As you might suspect, this is a time consuming, expensive, and public process. Worst of all, it may mean that someone whom you would never have chosen to make these types of decisions is given control over your health care.

A Health Care Proxy created by your estate planning attorney will usually be more comprehensive than one you create using a basic Proxy form obtained online or provided by your physician. These more comprehensive Proxies often name multiple agents in succession to address the possibility that the first-named Agent is unable to act, state your wishes about organ donation, and give extensive and important additional powers to the Health Care Agent which allow your Agent to make decisions beyond what the basic Proxy may permit. This additional authority can help avoid a guardianship proceeding to seek authority to take health-care related actions that are not authorized in the basic Proxy form.

If you have a Health Care Proxy it is important that you give a copy of it to your primary care physician, and that you bring a copy of your Proxy with you when you are admitted to the hospital. Hospital admissions folks often ask patients if they have a Health Care Proxy, and if the patient says ‘no’, the admissions clerk offers them one to sign on the spot. If you have an existing Proxy, your doctor or the hospital will gladly accept that document. However, if you forget that you have created a Proxy, or forget to bring the document to the doctor or hospital, you will be asked (or in the case of hospital admission, required) to complete a new Proxy, which will automatically and perhaps inadvertently revoke your existing Health Care Proxy. This is a bad result since the Proxy you carefully and thoughtfully prepared and which is far more comprehensive than the hospital or doctor’s form is invalidated by the hospital’s form.

Any time you are seeing a doctor to whom you have not already provided your Proxy, going into the hospital, even if it’s only for a test, or beginning a course of treatment such as physical therapy, bring a copy of your Health Care Proxy with you and ask the provider to make it part of your medical records. This is the best way to insure that the person you have selected to make health care decisions for you will be able to so if necessary.

January 2016

Five Facts to Know About Banks and your Estate Plan

December 30, 2015 by Attorney Suzanne Sayward

As an estate planning and elder law attorney, I often advise clients about how their assets, including their bank accounts, should be titled. Many times clients are advised to retitle their accounts into the name of their Trust. Sometimes I advise clients that accounts should be titled in one name only. There are reasons for my advice and these reasons are unique to that particular client’s situation. It is alarming to me how often clients come back after I have advised them to retitle their accounts and they say, “the bank teller told me to do something different so that’s what I did.” How you hold title to your assets, including bank accounts, has important implications for who will be able to manage those accounts for you in the event of your incapacity and how those assets will be distributed after your death, so it is vital to follow your lawyer’s advice (and nobody else’s) regarding these matters. This goes for other matters involving your estate plan, even when your bank is also involved.

Here are five situations where banking and estate planning often intersect, and what to be aware of.

The bank insists it needs a complete copy of your Trust in order to open an account in the name of your Trust. The Massachusetts Uniform Trust Code (MUTC) includes a provision specifically allowing an individual to provide a financial institution such as a bank or brokerage house with a Certification of Trust form in lieu of providing a copy of the entire Trust instrument. (For all you fact-checkers out there, this can be found at G.L.c.203E§1013.) Estate planning attorneys fought hard for the enactment of this provision because privacy is one of the primary reasons people create a Trust; they don’t want anyone else to read their private estate plan. Yet, clients often call me to say their bank insists on having a copy of their entire Trust document in order to open a Trust account. This is a requirement that is not in line with current law. In fact, the statute includes a provision allowing a court to impose damages on anyone who demands a copy of the Trust document after being provided with a Certification. If you encounter this issue, print out a copy of the statute and take it to your bankers to educate them about the law.

The bank tells you it needs a copy of your deceased mother’s Power of Attorney in order for you to access her account. It is astounding to me how often a child of a deceased client will call to say the bank is requesting the parent’s Power of Attorney so that the child can gain access to the parent’s account. A Durable Power of Attorney is a very important estate plan document that allows the maker (the principal) to appoint someone (the attorney-in-fact) to act on the maker’s behalf to pay bills, make decisions about investments, file income tax returns, etc. However, the authority of the attorney-in-fact exists only during the lifetime of the principal. When the principal dies, the Power of Attorney can no longer be used.

The banker requires that you provide a Taxpayer Identification Number for your Revocable Living Trust. A Revocable Living Trust is a very common estate planning tool. It can be used to avoid probate, provide for ease of management in the event of the incapacity of the Trust maker, reduce estate taxes, and provide creditor protection for a child’s inheritance. Most often, the person who creates the Trust names himself as the Trustee (manager) and is also the beneficiary (owner) of the Trust during his lifetime. For income tax purposes, this means that all of the income earned on accounts titled in the name of the Trust is taxable to the Trust maker. So long as the Trust maker is alive and serving as Trustee, all accounts opened in the name of the Trust should use the Social Security Number of the Trust maker. No separate Taxpayer Identification Number (TIN) (sometimes called an Employer Identification Number (EIN)) is required for the Trust in that situation, and in fact, one should not be used. A helpful guide from the IRS entitled “Understanding your EIN” explains in detail the circumstances under which a TIN or EIN is required.

The bank teller suggests you add someone else’s name to your account. Another common and quite frustrating situation that I hear all too often from clients or from the child of a client who has passed away, is that someone else’s name was added to the parent’s bank account at the suggestion of the bank teller. As you might imagine this can cause all sorts of trouble. First of all, how does the bank teller know that the child who has accompanied mom to the bank is trustworthy? A joint owner on an account has the same right of access to the funds as does the original owner. Also, there is a presumption under the law that when one joint owner dies, the account belongs entirely to the surviving joint owner – is that what mom intended? What about the other children? Further, for long-term care planning purposes it is sometimes vital that an account be owned in a particular way, and sometimes this is in a person’s individual name. When the bank teller advises the customer to do something else, it can have serious and expensive consequences for a family. Unlike lawyers, bankers do not (to my knowledge) carry malpractice insurance. As such, the harm that results from following legal advice dispensed by a bank is often not compensable.

The banker offers to obtain a Taxpayer Identification Number for you. A TIN or EIN (as explained above) is required for a decedent’s estate or often for an irrevocable trust. This number should be obtained for you by your accountant or your lawyer, not by the bank. The problem that often arises when the banker decides to take on this task is that the estate or trust ends up with two TINs which results in a major headache with the IRS. As Nancy Regan used to say in the 1980s war on drugs, “Just Say No’ if your bank teller offers to obtain a TIN for your Trust.

The important takeaway here is, if you have been advised by your attorney to open an account in a particular manner, do not let the bank teller (or financial advisor) persuade you to do otherwise. If a bank employee advises you to do anything that may have an impact on your estate plan, check with your attorney first before following the banker’s advice. It may be that the advice you are being given is not be appropriate for your situation, or worse — could disrupt your carefully crafted estate plan and cause complications and expenses for you and your family in the future.

Attorney Suzanne R. Sayward 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. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.

What’s New? Samuel, Sayward & Baler LLC Year in Review

December 1, 2015 by Attorney Suzanne Sayward

Season’s Greetings everyone!

This past year has been filled with so many changes at Samuel, Sayward & Baler LLC that I feel like a recap for our clients and friends is in order.

New people!

Attorney Pamela B. Greenfield joined our practice as a senior associate attorney last January and we’re thrilled to have her with us! Pam brings 9 years of experience in the estate planning and elder law areas of practice. If you’re not sure where to turn when a family member needs long-term care nursing home care, make an appointment to see Pam.

In April, Attorney Abigail V. Poole became a member of the Samuel, Sayward & Baler LLC team in a junior associate attorney role. Abby is developing her practice as an estate planning, elder law and estate and trust administration attorney and is a welcome addition.

Victoria Cataloni came on board in May and provides valuable and much needed administrative support to our team. Tori works part-time at Samuel, Sayward & Baler LLC while attending college in pursuit of degrees in French language and philosophy (double major) with a minor in political science. Fun facts about Tori – she is fluent in French and Italian and is thinking about becoming a lawyer!

New space!

With all these new people came the need for more space! Lucky for us, the offices adjacent to our space became available in the spring and we were able to increase our office space without having to move. As part of the expansion, the entrance to our firm has moved from the right side of the building (as to you exit the elevator) to the left side all the way down the hall. If you have not been in to see us in the past 6 months or so, stop by to check out our beautiful new space next time you are in the area.

New website!

We’ve updated our website but retained all of the robust content found on our old site. Check out our new website and read our articles, blogsand newsletters. We welcome your feedback as we continue to add useful content and features to our website.

New logo!

Samuel, Sayward & Baler LLC has a new look! We’re thrilled with our new logo and motto, ‘Smart Counsel, for Life’ which Maria and I feel captures the spirit of our practice. We want to be the ‘go-to’ resource for our clients’ estate planning needs through all phases of their lives.

Looking forward.

We look forward to seeing you in the coming year and continuing to provide the caring, personal service that our clients have come to expect and appreciate from us.

Best wishes for a happy holiday season and the new year from all of us at

Samuel, Sayward & Baler LLC!

Five Reasons to Call Your Estate Planning Attorney

December 1, 2015 by Attorney Maria Baler

Estate planning attorneys try not to feel unloved or neglected. We realize that, although our clients like us, they don’t always enjoy talking to us. The conversations we have with our clients are sometimes difficult, filled with talk of illness, death, taxes, and challenging family situations. These are emotional topics that many people would rather not discuss, and instead ignore and hope the issues will resolve themselves. However, as estate planning attorneys we are able to see firsthand how the advice and guidance we provide makes a difference in the lives of our clients and their families.

Here are five reasons you should call your estate planning attorney:

1. You are diagnosed with a serious illness. If you are diagnosed with a terminal or chronic illness, sitting down with your estate planning attorney to talk about a time when you may become unable to make decisions for yourself or may pass away is probably not at the top of your bucket list. However, now is exactly the time you should be having those conversations, as difficult as they may be. Many types of illnesses will result in a period of incapacity. It is important to plan for your incapacity and death while you are still competent to make decisions about your future. A priority is to sign documents such as a power of attorney and health care documents that will ensure your health care wishes are known and trusted people are named to make financial and health care decisions on your behalf if necessary. Your attorney can also advise you about whether ownership of assets or beneficiary designations should be changed, or estate plan documents should be updated.

2. There is a death in the family. There is generally no need to immediately call your attorney following a death in the family. However, it is important to touch base with your attorney shortly after the funeral to determine what actions may need to be taken. Real estate may need to be secured, cleaned out or sold. Personal property may need to be distributed. If the deceased owned assets in his or her individual name, a probate proceeding may be required to transfer those assets to the deceased’s heirs. If the deceased created a trust, a successor Trustee may need to be appointed and the trust administered according to its terms. Depending on the size of the estate, an estate tax return may need to be prepared and filed, and estate tax may be due. Although an estate tax return is not due until nine months after death, there can be significant work involved in identifying and valuing the deceased person’s assets before the return can be prepared. Your attorney can assist with all of these matters and is also likely a good resource for referrals to individuals who can assist with non-legal tasks, such as the clean-out of a home or the sale of real estate.

3. Your child is (or You are) engaged to be married. A child’s engagement is often a joyous time. After the initial excitement has subsided, contact your estate planning attorney about whether you should be encouraging your child to enter into a prenuptial agreement prior to marriage. Prenuptial agreements control the division of a couple’s assets in the event of divorce or death. They can be especially effective to protect assets one member of the couple owns prior to marriage (such as an interest in a family business or vacation home that may have been gifted by parents) and to protect inherited assets if a divorce occurs after the child has inherited assets from her parents. The timing of a prenuptial agreement can affect its validity. The further in advance of the wedding the agreement is negotiated and signed, the better. Discussing a prenuptial agreement is not easy when your child may be giddy with excitement over her upcoming wedding and you want to talk about death and divorce. However, a properly drafted and negotiated prenuptial agreement is a family’s best defense against losing important family assets in the event of a divorce. Prenuptial agreements are also important in second marriage situations where each member of the couple has assets they will be bringing to the marriage and may have children from a prior marriage to whom they would like to leave an inheritance.

4. Your child is experiencing difficulties. For many parents, it is difficult to confront the reality that a child may have substance abuse, gambling, or creditor problems, or may be in a bad marriage. When these issues arise, it is appropriate for parents to take a hard look at their own estate plan and make changes if necessary. Consider whether the child is still an appropriate candidate to serve in a fiduciary capacity or if the child’s inheritance should be held in trust rather than distributed outright in order to protect assets for the child’s benefit. Your estate planning attorney can advise you about your options and help you decide what is best for your family’s situation.

5. Minor Changes may still warrant a Conversation. There are many less significant life events that still warrant a conversation with your estate planning attorney. The birth of a child or grandchild should prompt you to check whether the new family member will automatically be included as a beneficiary of your estate (if that is your intention), or whether changes to your documents are necessary. The purchase of a primary residence or a vacation home may necessitate updates to your power of attorney. A conversation about whether or not to hold the new property in trust is also advisable, especially if the property is located in another state.

Even if your life is relatively uneventful and there is no new reason to talk to your estate planning attorney, keep in mind the importance of keeping your plan up to date. If it has been more than five years since you have met with your estate planning attorney, take the time to sit down with your attorney to review your plan and ensure that it is consistent with your current goals.

MassHealth Applications—How to Avoid a Calamity on the Rails

November 1, 2015 by Attorney Pamela Greenfield

Each year, I have the pleasure of chairing the Massachusetts Continuing Legal Education (MCLE) seminar on The MassHealth Process from Application to Appeal. While preparing for this year’s seminar which is scheduled for November 10, 2015, I began to think about the complexity of the process, how daunting it is for families and the myriad of mistakes that are made every day which often result in tens of thousands of dollars in uncovered medical expenses for seniors. It often feels like a runaway train, careening out of control as the forms, notices and lists of requested information take control of the gears.

Here’s the scenario—Anxious, emotional and weary family members set forth on a journey to secure Medicaid benefits (known as MassHealth in Massachusetts) which will allow their ill and frail loved ones to receive much needed care. These sons and daughters, husbands and wives have careers of their own. They are focused on caring for a loved one and maintaining their own family, yet the MassHealth application takes over, controlling every free moment of time. The stakes are always high (at $12-$15K per month in private pay) and the terrain is frequently uncharted. When the train falls off the track, which it often does, the nursing home is left holding the bag for the uncovered medical care it has already rendered and they look to these family members for answers (and possibly restitution).

So what can be done to avoid the head-on collision before it’s too late? Hiring an elder law attorney to be your guide through the long and rocky course can prove invaluable. We can assess an application from the outset and determine where the traps lie along the way. Were there gifts to family members within the lookback period? Were assets transferred into or out of a trust? How were the funds spent down to qualify for the program? Often a good elder law attorney can give the family an honest answer on how these factors may affect the success of the application and provide a strategy for how to resolve the issues before facing a denial. We also help to keep the train running smoothly and on schedule—interpreting and responding timely to requests for further information from MassHealth and filing an appeal when necessary.

At end of the journey, the train eventually reaches its destination—the nursing home costs are covered, all is well. Our goal during the journey is to minimize the burden to the family, keep open lines of communication with the nursing home and MassHealth, and ensure a smooth ride to approval for benefits. If you need assistance with the MassHealth application process please feel free to contact one of the attorneys at Samuel, Sayward and Baler.

November 2015

Five Conversation Starters for the Thanksgiving Table

November 1, 2015 by Attorney Suzanne Sayward

Thanksgiving is often a time when family members both young and old come together to eat too much good food and watch too much football. What better time to start a discussion about estate planning than Thanksgiving, when the family is gathered together? Here are five questions to get the conversation started.

Have you planned for how you will pay for long-term care if it’s needed? Many children find it awkward and uncomfortable to bring up the subject of money with their parents. However, planning ahead for the possibility that a parent will need long-term care is crucial. The cost of long term care, whether at home, in assisted living, or in a nursing home is very high. The monthly cost of a nursing home in Massachusetts is around $12,000 and the cost of round-the-clock care at home is often more than that. Long-term care costs are not generally covered by health insurance (Medicare). These costs are generally paid through a combination of: 1) paying privately for care; 2) long-term care insurance; or 3) Medicaid. Paying privately means that the care recipient simply writes a check for the cost of the care each month. Long-term care insurance is insurance purchased for the purpose of paying for long-term care. Medicaid is the state and federally funded program that will pay for long-term care if a person meets the financial eligibility criteria of the program. In general, this means having not more than $2,000 in so-called countable assets. If you are over age 60 and have never thought about how you would pay for long-term care, now is a good time to explore your options.

Do you have a Will and Trust to protect your young children if you die? It’s not just older folks who need to think about planning for the future. Many young parents put off estate planning because they’re too busy, they can’t agree on who should be named as guardian for their minor children, or their budgets are tight. However, as parents our job is to protect our children. Making sure that your children are not the subject of a protracted custody battle in the event of your death by choosing the person, or people, who would raise your children if you could not, is a fundamental duty of all parents. Further, many people are surprised to learn that the law considers 18 the perfect age at which to receive an inheritance, regardless of the amount. For many parents, the thought of their child receiving $5,000, never mind $50,000 or $500,000, at age 18 is terrifying. A trust is an excellent way for parents to protect assets for children and designate appropriate stewards (Trustees) to manage the money until the children have matured.

Do you have a Durable Power of Attorney? A Durable Power of Attorney is a legal document in which the maker (the principal) designates a person (the attorney-in-fact) who will have the authority to manage the principal’s financial affairs. It is used to address the possibility of a future incapacity. Since anyone could experience a period of incapacity regardless of age, every adult, whether age 18 or 88, should have a Durable Power of Attorney. Without a Durable Power of Attorney in place, your family will be forced to pursue a conservatorship through the probate court if you are in an accident or suffer a medical event that renders you unable to pay your bills, manage your investments, file an application for long-term care benefits, sign a tax return, etc.

Do you have a Health Care Proxy and have you discussed your wishes for care with your Health Care Agent? As with a Durable Power of Attorney, every adult should have an advanced directive designating the person (the Health Care Agent) who is authorized to make health care decisions in the event of incapacity. In Massachusetts, that is called a Health Care Proxy. However, it is not enough to simply sign a Health Care Proxy; you should have a serious discussion with your Health Care Agent regarding your wishes for managing your health care if you are not able to speak for yourself. Many people think of the Health Care Proxy as the “pull the plug” document. However, the reality is that there are many types of decisions that need be made for a person who is incapacitated. These decisions may affect the quality of your final days. A great resource to help you dive deeper into this discussion is Being Mortal by Atul Gawande, M.D. Check it out here and start the conversation.

When is the last time you reviewed your estate plan with your attorney? As we all know, time rushes by. This seems especially true as we get older. It is not unusual for clients to say, “I can’t believe it’s been 10 years since we were here – it seems like it was just a couple of years ago.” Your estate plan is a work in progress and it needs to be reviewed and updated on a regular basis. Life happens; things change. It may be that issues that were not of concern when the documents were signed are now important. This could include the need for long-term care planning, tax planning, or creditor protection planning for a child who is getting divorced. Ask your parents to take a minute to check the date on their estate plan documents to see when they last updated them with their attorney, and then do the same yourself. If it’s been more than five years, chances are a review is in order.

Bonus question: Once you’re done covering the hard stuff, you can wrap up with, ”So how ‘bout those Pats?”

To all of our readers from all of us at Samuel, Sayward & Baler LLC, warm wishes for a wonderful Thanksgiving!

November 2015

Off to College – Hopefully with a 529 Plan!

October 1, 2015 by Attorney Maria Baler

Sending my first and only child off to college this fall has given me a new appreciation for the value of Section 529 Plan accounts. Many of our clients set up these accounts for their children or grandchildren when they are young, with the intention that the account will be there to be used when it’s time to pay for college. I will take this opportunity to say thank you, on behalf of all of the beneficiaries of 529 Plans out there, to those of you who have had the foresight to set up these accounts. When paying for college, every little bit of assistance helps!

It is important to understand that 529 Plan accounts are not treated the same for all purposes. In addition, the identity of the owner of the account can affect how the account is treated. From an estate and gift tax perspective, the law views the amount contributed to a 529 Plan account as a gift to the beneficiary of the account (the child or grandchild). If the owner of the account passes away, the balance of the account is not added to the owner’s other assets when determining if an estate tax must be paid or when calculating the estate tax due. That being said, the owner of a 529 Plan account retains certain rights, such as the right to change the beneficiary of the account, and to withdraw the contributed funds from the account (although if withdrawals are made for reasons other than to pay for education expenses income tax plus a penalty will be due on the withdrawn amount).

New Year2 From a long-term care planning perspective, the funds in a 529 Plan account will be considered “countable” assets in determining the owner’s eligibility for Medicaid benefits (the public benefits that pay for long-term nursing home care). Depending upon the owner’s situation and the value of other assets, the 529 Plan assets may have to be spent on the owner’s care before the owner will be eligible to receive Medicaid benefits. For this reason, if the owner’s goal is to ensure the funds in the 529 Plan account are available for education, and the owner is willing to give up control of the account and access to the funds in the future, it may be advisable to transfer ownership of the account to the parent of the beneficiary/child or grandchild. This should not be done hastily as the transfer of the ownership of the account will be a disqualifying transfer for Medicaid eligibility purpose. In addition, careful consideration should be given to whether the prospective new owner is financially responsible, and, if relevant, the impact on financial aid if the account is owned by the student’s parent vs. grandparent.

Finally, keep in mind that the owner of a 529 Plan account has the ability to designate a successor owner. This is something that should be done in all cases. Without a successor owner named, the account will be subject to probate at the account owner’s death, which involves cost and delay in access to the funds for a period of time. Probate can be easily avoided by designating a successor owner.

Five Examples of DIY Estate Planning Gone Bad

October 1, 2015 by Attorney Suzanne Sayward

Self-sufficiency and resourcefulness are admirable traits – knowing how to change a tire, wallpaper a bathroom, or use duct tape to fix any number of problems can save both time and money. However, not all tasks should be tackled at home – dental work, anything to do with electricity, and getting bats out of the attic are examples of tasks for which most people should hire a professional. With the proliferation of DIY (do-it-yourself) kits and forms available online these days, estate planning may seem like one of those items that could be handled at home and save a lot of money. Beware – the consequences of not getting it right can be worse than a do-it-yourself root canal! Here are five real examples of DIY estate planning gone bad.

DIY Power of Attorney resulted in the need for a court conservatorship. The children of an elderly woman who was in a nursing home contacted me to undertake planning to protect assets against complete spend down on long-term care costs. Because of this family’s situation, there was an opportunity to preserve the home by transferring it out of mom’s name even though she was already incapacitated and in a nursing home. Unfortunately, a few years earlier, the children had helped mom “save money” by having her sign a Power of Attorney form they found on the Internet. The Power of Attorney did not include the authority they needed to undertake the planning that would allow them to preserve mom’s $800,000 home against a lien for long-term care Medicaid benefits. Because mom no longer had the capacity to execute a new Power of Attorney, we had to file for a Conservatorship with the probate court. This took a long time, required a number of medical certificates from mom’s doctors, and was expensive. Further, the court appointed another attorney to represent mom’s interests, paid for by mom. All told, it cost more than $7,000 and took approximately eight months to accomplish what could have been done in less than a week for a fraction of the cost if there had been a comprehensively drafted Power of Attorney in place (which would have cost far less than $7,000).

DIY long-term care planning meant loss of home to Medicaid lien. I recently had a very sad situation where a family lost the home that had been in their family for more than 100 years because they did not seek the advice of an elder law attorney when the mother of my client went into a nursing many years ago. Although Medicaid imposes a period of ineligibility for long-term care nursing home benefits if assets are given away within five years prior to applying for benefits, there are exceptions to that rule. This family would have qualified for one of those exceptions and the home could have been transferred to my client without any penalty. Had that been done, the home would have belonged to my client free and clear of any claim by the state for the cost of the mother’s nursing home care. Unfortunately, I was not consulted until after the mother had passed away. At that point, the Commonwealth had a lien against the ancestral home for an amount that exceeded the value of the property. Once the mother passed away, the opportunity to transfer the home to the daughter under one of the exceptions to the transfer rules and free of the Medicaid lien was lost. The house was sold and the family received nothing – all of the proceeds went to the state.

DIY estate planning meant loss of benefits for beneficiary with disabilities. I had a client contact me to help her settle the estate of her brother who had passed away at the age of 45 having never married and leaving no children. The brother had prepared his own Will leaving his estate to his two siblings. While it was good that he had the foresight to create a Will, it was not so good that he did not consult with an estate planning attorney. It turned out that one of the siblings was receiving needs-based governmental benefits because of a disability. Unfortunately, this sibling’s entitlement to an inheritance caused him to lose those benefits. While we were eventually able to requalify him for those benefits, we needed to go to court to do so. Further, the solution to the situation most likely means that a large part of the inherited wealth will be taken by the state when the disabled brother dies. With planning, the deceased brother could have created a trust that would have provided for his disabled sibling and ensured that any amounts remaining at his sibling’s death were distributed to his sister and not to the state.

DIY Will Necessitated Court Permission to Sell Real Estate. I had a client who came to see me because he was named as the Personal Representative (Executor) of his aunt’s Will. The Will left everything to four nieces and nephews, including my client. It was a fairly simple estate – aunty had only her home and a bank account. However, the Will did not grant the Personal Representative the authority to sell real estate. That meant that in order to sell the house, we had to file a petition with the court seeking permission to sell the real estate. This delayed the process and cost the estate several thousand dollars more than it would have cost to have a proper Will prepared by a lawyer.

DIY Realty Trust created defect in title to property. In the course of updating an estate plan for an new client whose husband had passed away and who had done all of their legal documents for them (no, he was not a lawyer), it was discovered that he had created a defect in the title to their home as a result of a series of transactions conveying their real estate in and out of trust. We had to engage the services of a real estate attorney to clear the title and record a variety documents with the Registry of Deeds. The cost of this was about $4,000 – far more than it would have been to engage an attorney to do it correctly from the beginning.

The above are just five examples of what I see in my practice on a regular basis. While it’s great to save money, be careful about being “penny-wise and pound-foolish” – getting it right the first time will usually save a lot of time and money in the long run. And remember, getting it right the first time requires seeking the assistance of an experienced estate planning attorney. Next to DIY documents, documents created by attorneys who do not practice primarily in this area can also create more problems than they solve.

October 2015