Can money raised on GoFundMe become part of someone’s estate? Attorney Brittany Citron breaks down how fundraised assets may be treated in estate planning, what families should know, and why proper planning matters. If you’re organizing a fundraiser or thinking ahead for loved ones, this is an important conversation to have.
Assets
To Gift or Not to Gift: Understanding Basis
As the holidays race toward us, our thoughts turn to the perfect gift for everyone on our list. It is also the time of year when many of our clients think about making larger gifts to family members and want a refresher on the gifting rules.
Although understanding the gift tax rules is important, there are other factors beyond those rules that should be considered if you are considering making a large gift, whether during the holidays or at any time of year. One of the least understood but more important factors is basis, which is impacted by whether an asset is gifted or inherited.
Basis is generally the tax cost of an asset, which is used to compute capital gain or loss when that asset is sold. Gifts of cash have no capital gain tax implications, but gifts of assets like stock or real estate that have a tax cost and have appreciated in value since the asset was purchased carry with them significant capital gain tax implications if and when that asset is sold. Federal income tax rules treat the tax “basis” of property differently depending on whether it is received by gift during life or inherited at death, and these differences impact the amount of future capital gains tax that will be paid upon a sale. Understanding these differences will help you evaluate whether to give a certain gift during your lifetime or wait to give that gift after your death.
The general rule is that when an asset is transferred by gift, the gift recipient (the donee) takes the gift giver’s (the donor’s) tax basis in that asset, often referred to as “carryover basis.” If, as is often the case, the donor’s tax basis is lower than the current value of the asset at the time of the gift (i.e. the asset has appreciated), the unrealized gain “carries over” to the donee. A later sale of the asset by the donee will result in the donee having to “recognize” this built-in gain and pay capital gain tax on the difference between the tax basis and the sale price. If you are giving a gift of an asset that has appreciated in value, you should give the recipient any records you may have that document the asset’s purchase price and anything else that may be relevant to your tax basis in that asset.
For example, if you purchased Microsoft stock for $100,000 many years ago, it is now worth $300,000, and you give your Microsoft stock to your son as a gift for the holidays, your son’s tax basis in the Microsoft stock is $100,000, and he still has your $200,000 unrealized gain. If your son later sells the stock for $320,000, his long-term capital gain is $220,000, and his combined state and federal capital gain tax will be anywhere from 5% ($11,000) to 25% ($55,000).
The general rule for an asset that is inherited from a deceased person is very different – and generally more favorable to the recipient. An asset acquired from a deceased person has a basis equal to the asset’s “fair market value” on the date of the deceased person’s death. This is commonly called a “step-up” in basis when the asset appreciated during the decedent’s lifetime, but it can also be a “step-down” if the asset declined in value. The step-up in basis essentially wipes out all pre-death unrealized capital gains, which can result in significant capital gain tax savings if the recipient intends to sell the asset.
For example, if you hold your Microsoft stock in which you have a tax basis of $100,000 until you die and leave it to your son in your Will or Trust, and if the Microsoft stock is worth $300,000 at your death, your son’s tax basis in the Microsoft stock is “stepped up” to $300,000. If he sells the stock shortly after your death for $320,000, his gain is only $20,000, and his combined state and federal capital gain tax will be anywhere from 5% ($1,000) to 25% ($5,000). Holding the asset until death has effectively avoided capital gains tax on the $200,000 of pre-death appreciation.
When considering whether to gift appreciated assets prior to death, take the following into account:
- Gifting allows the donor to shift wealth and may reduce the estate tax payable at the donor’s death, but the carryover basis may result in significant capital gain tax if the gifted assets are sold. Consider gifting assets with little or no built-in capital gain or cash.
- Retaining assets until death is usually more favorable for low-basis, highly appreciated assets, to take advantage of the step-up in basis on inherited assets, particularly if the donor’s estate is unlikely to incur estate tax.
- Consider the estate tax rates. For example, if the donor’s estate will not pay federal estate tax (because the donor’s estate is less than $15 million in value) but is likely to pay Massachusetts estate tax (because the donor’s estate is over $2 million in value), the estate tax rates in Massachusetts (which range from 6% to 16%) may be lower than the capital gain tax that would be paid if the same asset was given to the intended recipient prior to death and later sold.
- The interplay of the federal estate and gift tax exclusions, portability of the federal estate tax exemption, and state estate taxes can influence whether lifetime gifts or inheritance provide a better tax outcome.
- Different types of assets have different rules about basis. For example, tax-deferred assets such as traditional IRAs, deferred compensation, etc. do not receive a basis step-up at death and remain taxable as ordinary income when collected by beneficiaries.
In short, deciding whether to gift or hold an appreciated asset requires looking beyond gift tax rules to the often-overlooked impact of basis and future capital gains taxes. The most tax-efficient strategy will depend on the type of asset, its built-in gain, your overall estate, and the federal and state tax landscape. Because these rules are complex and highly fact-specific, consulting with an estate planning or tax professional before making significant gifts can help ensure your generosity achieves its intended result. If we can assist you in determining the best approach for your gifting this holiday season, please do not hesitate to reach out to one of our attorneys.
Attorney Leah A. Kofos is an attorney with the Dedham firm of Samuel, Sayward & Baler LLC, which focuses on advising its clients in the areas of trust and estate planning, estate settlement, and elder law matters. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit ssbllc.com or call 781-461- 1020.
© 2025 Samuel, Sayward & Baler LLC
Five Things Your Estate Plan Allows You to Be Thankful For
Estate planning is hard. Discussing topics like incapacity, death and taxes are unpleasant. It’s the reason why an estimated two-thirds of Americans do not have an estate plan. But like many hard things, after it is done there is a sense of accomplishment and relief, and in many cases gratitude. Estate planning may be something you have been putting off for years, if not decades. Getting it done is a great feeling, and something that benefits not just you but your loved ones. Estate planning is an essential aspect of financial well-being and ensuring that your assets and loved ones are protected. Here are five things to be thankful for when your estate plan is done.
1. Peace of Mind
One of the most significant benefits of estate planning is the peace of mind it provides. Knowing that your affairs are in order and that your loved ones will be taken care of in the event of your passing can be a great source of comfort. For families with minor children, estate planning means you have put in place a plan for your children to be taken care of by someone you choose if you pass away while they are still young. It also means that you have created a trust so inherited assets can be managed for young children until they are mature enough to take control of those assets themselves. Estate planning minimizes the potential for family disputes over assets, designates decision-makers of your choice, and makes the difficult process of grieving much more manageable for your heirs.
2. Control Over Your Legacy
Estate planning allows you to have control over your legacy. You get to decide how your assets will be distributed, who will receive them, and under what conditions, and who will oversee that process. Holding assets in trust for minor children or a beneficiary with special needs is important. It may also be important for older children for whom asset protection is a concern due to an unstable marriage, a pattern of mismanagement of assets, profligate spending, creditor issues, gambling issues or substance abuse. This control ensures that your assets are used in a way that aligns with your values and priorities. Whether you want to support your family, friends, favorite charities, or any other cause close to your heart, estate planning allows you to make that happen.
3. Tax Efficiency
Effective estate planning, especially in a state such as Massachusetts with a separate state estate tax, can reduce the tax burden on your estate, leaving more of your assets to your loved ones. By using strategies like trusts, gifts, and other tax-efficient mechanisms, you can maximize the wealth you pass on to the next generation. If you have a large IRA or other tax-deferred retirement plan, the estate planning process will help you understand how the income tax on these assets will impact you and your heirs. You will be thankful for the opportunity to minimize the impact of these taxes on your estate and your heirs to ensure that your beneficiaries inherit as much as possible.
4. Smooth Transition of Assets
The estate planning process starts with compiling information about the assets you own, how they are owned, and how beneficiaries are designated. Creating such an inventory and keeping it up to date will go a long way toward helping the people who are implementing your estate plan carry out their duties efficiently. Ensuring your assets are owned properly and beneficiaries are designated appropriately and consistent with your plan is an important part of estate planning and will ensure your plan works as intended. In Massachusetts, where the probate process can take a year or more to complete, the use of Trusts in an estate plan can avoid the probate process and allow for immediate access to assets at death. This means that your beneficiaries will receive their inheritance more quickly and with far less delay and frustration. The ability to provide a seamless transfer of wealth will give you peace of mind and will be a source of gratitude for your heirs after your death.
5. Your Team
It takes a village, as they say, and estate settlement and trust administration is no exception. If planning is done properly, an important part of the legacy you leave will be a team of advisors – your estate planning attorney, your accountant and your financial advisor – who will guide and advise your family after your lifetime while ensuring your estate plan is carried out according to your instructions. Introducing your family to these team members while you are alive can ensure an even more seamless transition. You will be thankful for the guidance your team provides you during your lifetime and will have peace of mind knowing they will be there to guide your family after your death.
Estate planning offers peace of mind, control over your legacy, tax efficiency, a smooth transition of assets, and a team that will guide you and your loved ones through whatever the future brings. If you have not already created your estate plan, start the process. If you have an estate plan in place, make sure it is up to date. And while you are planning, be thankful for the opportunity estate planning provides to secure your family’s future, provide for charitable causes, and make your passing more manageable for those you leave behind. Your heirs will certainly thank you after you’re gone.
Maria C. Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the former President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.
November 2023
© 2023 Samuel, Sayward & Baler LLC
Five More Important Numbers to Know When Applying for Long-Term Care Medicaid Benefits
Back in December, I wrote about in the event you require Medicaid (MassHealth) benefits to pay for long-term nursing home care expenses. To remind you, Medicaid is a federal/state government health care benefits program available to those who meet its medical and financial eligibility rules. Here are five more important numbers to keep in mind if you are applying for long-term care Medicaid benefits in Massachusetts.
- An Account with $1,500 for Burial or Funeral Expenses is a Non-Countable Asset.
As you are preparing to apply for MassHealth benefits you may “spend down” your assets in certain ways and still qualify. One way of spending down your assets is converting countable assets into non-countable assets. For example, MassHealth permits you to have a separate bank account of up to $1,500 for funeral and burial expenses. This is in addition to the $2,000 a single person is permitted to own to qualify for MassHealth benefits. For example, let’s say you have a checking account with a balance of $3,500, which results in your ineligibility because you are over the $2,000 limit. Now let’s say you open a burial and funeral expenses account and deposit $1,500 into it. As you have only $2,000 remaining in your checking account you now meet the financial eligibility requirements to receive MassHealth benefits, and, bonus, you have put aside funds to assist with expenses after your death. This account is in addition to any prepaid irrevocable funeral arrangements you may make.
- Your Principal Residence’s Equity Up to $893,000 is a Non-Countable Asset (for 2020).
Is my home considered a non-countable asset for Medicaid? If your principal residence is located in Massachusetts and your equity interest in the residence does not exceed $893,000 (for 2020), then it will be considered a non-countable asset for Medicaid benefits eligibility purposes. This equity interest amount typically changes each year. If your equity interest in your home is greater than that amount, it may cause you to be ineligible for Medicaid benefits, and you may need to sell your home or spend down the equity prior to or while your eligibility for Medicaid benefits is determined. However, if you make a good faith effort to sell your home Medicaid may exempt it from being countable for a period of nine (9) months, which time period may be extended. Further, MassHealth may waive the period of ineligibility due to your home’s excess equity if it may cause undue hardship.
Let’s say your home has a tax-assessed value of $1,000,000 and you own it free and clear. In that case, MassHealth would consider you ineligible for benefits because your home equity exceeds $893,000. Now let’s say you have a $250,000 mortgage on your $1 million home resulting in the equity interest in your home being $750,000. You are eligible for MassHealth benefits. Note that your home may be a non-countable asset immediately, regardless of your equity interest in it, if your spouse resides with you, or you have a child who is under age 21 or blind or permanently disabled, a sibling with ownership interest, or an adult child who is taking care of you and meets specific requirements residing with you. There are other things to know about Medicaid benefits for seniors and your home that are discussed here.
- You May Keep $72.80 of Monthly Income as Your Personal-Needs Allowance (PNA).
In general, your monthly income will be paid to the nursing home (the “Patient Paid Amount”) once you begin to receive MassHealth benefits, with some permissible deductions. One permissible deduction is the Personal-Needs Allowance of $72.80, which amount has not changed in several years. You are permitted to keep the Personal-Needs Allowance in Massachusetts (PNA) to be used for any personal expenses not covered by Medicaid. You can pay for clothing, salon visits, etc. from your PNA account.
Other typical permissible deductions from income are health or medical insurance premiums and support for children, parents, siblings or your spouse remaining at home who meet certain criteria.
- 4 to 6 Months (or Longer) from MassHealth Application Submission to Approval.
It can take a few months to prepare a MassHealth application and gather the information you need to submit along with the application. Once you have submitted the application and documentation to MassHealth it may take 4 to 6 months, or longer depending on your circumstances, to obtain approval to begin receiving Medicaid benefits. During that time period you will receive correspondence from MassHealth requesting additional information to be provided to them. The initial determination you receive from MassHealth on your application may be favorable or unfavorable. If the determination is unfavorable an appeal may be filed with the Board of Hearings.
- There Are 26 Aging Services Access Points (ASAPs) in Massachusetts.
Aging Services Access Points (ASAPs) are private, non-profit agencies that contract with the Executive Office of Elder Affairs and cover 26 separate geographical regions in Massachusetts. They provide home care services, investigate elder abuse and assist with health insurance benefits, including Medicare inquiries and MassHealth applications. The local ASAP is Health and Social Services Consortium, Inc. (HESSCO) which covers the towns of Canton, Dedham, Foxborough, Medfield, Millis, Norfolk, Norwood, Plainville, Sharon, Walpole, Westwood and Wrentham. Although ASAPs are a great source of information, it is always best to consult with an experienced elder law attorney before having anyone prepare a MassHealth application on your behalf, to ensure you are receiving appropriate advice about the timing of the submission of the application as well as any planning steps you may wish to take to achieve eligibility. In many cases, having an elder care or long-term care attorney prepare the application will be in your best interest, and give you the greatest chance of success.
Meeting the financial eligibility criteria to receive Medicaid benefits to pay for long-term nursing home care expenses can be confusing and difficult depending on your assets, health and family relationships. An experienced long-term care and elder law attorney can assist you with advance planning to preserve your assets, address your questions and concerns, and prepare you and your family to navigate the eligibility process.
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.
March, 2020
© 2020 Samuel, Sayward & Baler LLC
What Happens to Your Personal Possessions After Death?
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