Q: What is probate and why does everyone want to avoid it?

A: Probate is the court process of changing the title on an asset when someone passes away. Real estate, bank accounts, and investment accounts owned in a person’s individual name at death which do not have a beneficiary designated are examples of assets that need to be probated. The term ‘probate’ is often used to describe the process of administering someone’s estate after death. This typically involves marshalling the probate assets, paying debts, taxes and expenses, and ultimately distributing the estate assets to the beneficiaries entitled to receive them.

Delays, costs, aggravation, and loss of privacy are all good reasons to avoid probate. If an asset needs to be probated, that means no one will have access to that asset until the court has allowed the probate petition and a Personal Representative has been appointed. A delay in being able to access money to pay expenses such as funeral costs or to make mortgage payments creates a difficult and aggravating situation for surviving family members who are trying to manage matters after someone has passed away. In Massachusetts, the probate court system is currently in serious disarray and delays are significant. Probate can be costly, with attorney fees and court filing fees that must be paid. Finally, probate is a public proceeding meaning that anyone who wants to snoop into the business of a decedent’s probate estate has the opportunity to do so.

Avoiding probate is relatively easy. For example, if you own assets jointly with your spouse or child, the asset will pass automatically and entirely to the survivor when the first joint owner passes away; no probate would be needed. Assets that have a named beneficiary to receive them also avoid probate provided the named beneficiary survives the owner of the asset. IRAs and other retirement accounts, life insurance, and annuities typically fall into this category. Assets that are titled in the name of a Trust also avoid probate. While owning assets jointly with another person is a way to avoid the need to probate the assets there are some downsides to joint ownership that should considered before adding someone else as an owner on your account.

Q: Does signing a new Health Care Proxy revoke my current Health Care Proxy?

A: Yes. A Health Care Proxy is a document that appoints a person to make health care decisions on your behalf when you cannot (your “Health Care Agent”). Sometimes when you visit your physician’s office or the hospital for a procedure or emergency, you will be asked to fill out and sign a new Health Care Proxy that is a standard, basic form. If you have already completed a Health Care Proxy as part of your estate plan, you should not sign the new Health Care Proxy. Doing so revokes and replaces your estate plan Health Care Proxy, which has expanded beneficial powers to ensure your Health Care Agent has the authority to take the necessary steps to assist you without court involvement.

Instead, when you receive a copy of your Health Care Proxy from us, you should provide a copy to your physician’s office immediately so that it is included in your medical records.

Additionally, we recommend saving the Health Care Proxy electronically so that you may access and provide it via your Smartphone in an emergency. Electronic and physical copies of your Health Care Proxy should be provided to your Health Care Agents for the same reason, too.

An experienced estate planning attorney can assist with completing a Health Care Proxy if you or a family member over age 18 have not completed one yet, or it is time to update your Health Care Proxy because you wish to have other Health Care Agents designated or it is several years old.

October 2020

Q:        I hear that elder law attorneys charge a lot to prepare a MassHealth application for long-term nursing home care costs.  My friend said that when her cousin was in a nursing home there was a service that prepared the application for free.  Why would anyone pay for something that they could have for free?

A:        That’s an excellent question and the answer is sometimes they shouldn’t.  For example, a single person who has assets that are at, or close to, the program eligibility limit of $2,000, does not have an irrevocable trust, and who has not made any gifts of assets during the 5-year period preceding the application, does not need to pay an elder law attorney to prepare a MassHealth application for long-term care benefits.

The reason that single individuals who have assets in excess of the program limit and married couples where one spouse needs nursing home care, should consult with an elder law attorney is that an elder law attorney can provide advice about options for preserving their assets from having to spent down on long-term care.  The savings that can be achieved through planning can be far in excess of the legal fee paid to prepare the application.

For people paying privately for long-term nursing home care, the out of pocket monthly cost in Massachusetts ranges between $10,000 and $15,000 (or more!) per month.  The sooner MassHealth eligibility is achieved, the sooner that monthly outlay will cease or be significantly reduced.

When you engage an elder law attorney you are hiring an advocate who is working for you.  When you use a service recommended by the long-term care facility, you will not receive legal advice about your planning options such as how to preserve your assets or how to achieve eligibility more quickly, nor are you engaging an advocate for your application.  In fact, many of these ‘free’ services are actually paid by the nursing homes.  Keep in mind that it is in the nursing home’s best interest that residents pay privately for their care versus becoming eligible for Medicaid (MassHealth).  That is because the monthly fee that the facility receives for a Medicaid resident is much less than the amount they receive from a person who is paying privately.

If you have questions about whether you should hire an elder law attorney to prepare and file a MassHealth application for long-term nursing home care costs, please contact us to speak with one of our attorneys.

When someone takes the time to create a Will or Trust that sets out their wishes for the distribution of their estate at death, they often experience a feeling of relief knowing that their assets will be distributed in accordance with their wishes. However, if the estate plan is not carefully crafted and then reviewed and adjusted from time to time, the intended results may not be achieved. 

Read on for 5 ways in which the best laid estate plans can be derailed. 

1. Assets are distributed other than by way of the Will or Trust.  In some ways a Will is the “distributor of last resort.”  For example, if you own assets jointly with another person, or if you designate a beneficiary to receive an account (‘pay-on-death’ or ‘transfer-on-death’), then those assets are not going to pass under your Will or Trust.  If someone provides for specific bequests in her Will, such as $5,000 to my sister Jane or $1,000 to the Animal Rescue League, but has her children as joint owners or pay-on-death beneficiaries on all of her accounts, then those specific bequests will not be paid.  Make sure you understand how your assets will be distributed and that you own your assets in a way that will achieve your distribution goals. 
2. Taxes are not factored in – part 1. There are two types of taxes to be concerned about when planning your estate:  income tax and estate tax.  For the most part, inherited assets are not income taxable to the recipient.  For example, if my aunty leaves me $50,000 in her Will, that is not taxable income to me.  However, qualified retirement accounts such as IRAs and 401ks are an exception to this rule.  If my aunty names me as the beneficiary of her $50,000 IRA, that will be taxable income to me.  Consequently, I will not actually receive a $50,000 bequest; it will be diminished by the state and federal income taxes I must pay. 
3. Taxes are not factored in – part 2.  Estate taxes are imposed on the value of the assets that a person owns at death and that are distributed to someone other than a spouse or charity.  Currently, the federal law provides for a very large exemption from estate tax of almost $11.6 million per person.  That means that if the value of a person’s estate is less than $11.6 million, there is no estate tax payable to the IRS.  Massachusetts has its own estate tax system which allows for an exemption of $1 million dollars.  If your estate is more than $1 million, be aware that the amount you will be passing on to your beneficiaries will be less than the full value of your estate. In addition to being aware of the tax liability, it is also important to specify in your estate plan who is going to bear the burden of the tax.  For example, say you have a family business worth $2 million and other assets (home, investments, retirement accounts) totaling $2 million.  Your daughter works in the business so in your Will you leave the business to her.  Your Will then leaves the rest of your estate (the residue) to your son.  There will be $280,000 of estate tax payable to Massachusetts.  Who will pay that tax?  Should it be borne equally by your children.  If so, does the business have the liquidity to pay its share?  Should the tax be paid entirely from the residue of your estate (the share going to your son)? What’s ‘fair’?  Your estate plan should state your intentions. 
4. Estate assets change over time and the estate plan is not updated.  It is very important to review and update your estate plan from time to time because things change.  This happens often with distributions of tangible personal property such as jewelry and collectibles.  I have seen a number of situations where the Will or accompanying memorandum leaves a particular piece of jewelry to a someone but that item has been sold or cannot be found when the testator dies.  It is particularly troublesome when the item cannot be located and no one has any information about whether it was sold or intentionally given away during the deceased’s lifetime – it’s in those situations that the finger-pointing begins… 
5. The possibility that a beneficiary will predecease the testator is not factored into the planning.  Your Will or Trust should include provisions stating what will happen in the event one or more of your beneficiaries predeceases you.  For example, if you leave $10,000 to your grandchildren Gary and Caroline in your Will, what should happen to that bequest if Gary predeceases you? Should Gary’s share be distributed to Gary’s children? Should it be distributed entirely to Caroline? Should it lapse?  

These are just a few of the pitfalls that can derail your intentions for the distribution of your assets after your death. When you take the time to consider and decide how your estate should be distributed among the people you care about, make sure that your wishes are actually carried out at your death by working with an experienced estate planning attorney  to create your Will or Trust, and then reviewing your estate plan with your attorney every few years.  Happy planning! 

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

August, 2020

© 2020 Samuel, Sayward & Baler LLC

Q:        My daughter will be heading off to college in the fall and a friend told me that I won’t be able to get information from the college about her grades or even about her health if she was sick.  Is this true and if so, what can I do about it?

A:        Yes, that is true. Once a child turns age 18, she is considered an adult in the eyes of the law and is entitled to the same privacy protections as every other adult. The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that prohibits health care providers and insurers from sharing information about you without your permission.  The law imposes monetary fines on medical providers who violate the HIPAA rules.

Your child may grant you access to her medical information by signing a HIPAA Authorization that releases her medical providers from any liability under HIPAA should they speak with the individuals named on the HIPAA Authorization. In addition to signing a HIPAA Authorization, your college student, and really everyone over the age of 18, should create a Health Care Proxy, that authorizes someone to make health care decisions for her if she is not able to do so herself.

The Family Educational Rights and Privacy Act (FERPA) is a federal law that protects the privacy of student education records. While a student is a minor, FERPA ensures that parents have certain rights with respect to their children’s education records. However, once the student reaches age 18, these rights transfer to the student.

Although you lose the right under the law to have access to this information about your child once she turns 18 years of age, your college student may grant you access to her educational records.  In fact, most colleges and universities have a FERPA Release form that the student may sign authoring release of educational records to parents.

The key here is that your child, not you, must create and sign these documents and that your child will choose who to include on her HIPAA Authorization, who to designate as her Health Care Agent under her Health Care Proxy and whether to grant consent under FERPA.

Q:       I have left each of my grandchildren $10,000 in my Will.  A friend recently told me this will cause a problem for my grandson Jared who has Down Syndrome.  Is this true?

A:        It is quite possible that Jared’s receipt of $10,000 from your estate following your death could create a problem for him.  The reason is that individuals with disabilities such as Down Syndrome are often eligible for valuable governmental benefits and services.  However, many of these benefits are ‘needs based.’  That means that in order to be eligible for the benefit or service, the individual can have only limited assets and income.  A person who receives a gift of money or property may lose his eligibility, and may need to spend that money on services before he will be eligible again.  That does not mean that you need to exclude Jared from your Will.  A supplemental needs trust can be used to hold or receive money for a person with a disability to ensure that those valuable governmental benefits are not lost, while allowing the trust funds to be used for the benefit of the disabled person to pay for things his benefits may not cover.  You should discuss this with your estate planning attorney to be sure you are doing the right thing for your grandson.