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Estate Plan
From Summer Fling to Forever: 5 Estate Planning Considerations for Couples
Summer is approaching. The warm air, the sunshine boosting our serotonin, and those summer nights spark summer romance which can be just a fling, or it can be the start of a deep, transformative relationship. June also marks the beginning of wedding season and, of course, Pride Month, where we celebrate the LGBTQ+ community and all forms of love.
Whether you are married or not, estate planning is critical in providing for your special someone when you are gone. It is also important to plan for your incapacity to ensure that your partner can take care of you and your well-being. Here are 5 things every couple should consider when planning their forever.
1.Don’t assume that everything will go to your spouse or significant other at your death.
A lot of couples assume that when one of them dies, all of their property goes to their spouse or significant other. Sometimes this is true, and sometimes it isn’t.
If you don’t have a Will, the intestate laws of Massachusetts will determine who will inherit your estate. If you are married and all of your children are children of the marriage, then your estate will pass to your spouse. But if either you or your spouse have children from another relationship, then your spouse will only receive the first $100,000 plus 50% of the remaining estate.
If you are married and don’t have children, and you have at least one surviving parent, then your estate will be divided between your spouse and your parent(s). Also, if you are not married to your partner, regardless of how long you have been together, your partner does not automatically inherit your estate. Don’t put off creating an estate plan on the assumption that everything will pass to your spouse or partner anyway, because that may not always be the case.
2.Don’t assume that your spouse or significant other will be able to do everything for you if something happens to you.
Planning for you and your partner’s incapacity is just as important as planning for after your death. If you become incapacitated, your medical provider will typically look to your next of kin to make healthcare decisions on your behalf. Unfortunately, if you are not married to your partner, your partner is not considered your next of kin, so they won’t be able to make healthcare decisions on your behalf, when your partner is probably the one person who best knows your wishes. Executing a Health Care Proxy can fix this issue by designating your partner as your healthcare agent to make decisions for you should you become incapacitated.
This issue also arises with handling your finances. Without a Power of Attorney, your partner will not have the authority to act on your behalf with your finances if you become disabled or incapacitated. This is especially important when you rely on both of your incomes to maintain your household and pay expenses.
3.Strategies to reduce estate tax liability.
Married couples can utilize different estate planning strategies to minimize tax liabilities after their deaths and maximize the inheritance for their beneficiaries.
Property passing to a U.S. citizen spouse at the death of the first spouse passes free of federal and Massachusetts estate tax, regardless of the amount. The federal estate tax exemption is the amount that each person is permitted to pass on free of any federal estate tax, which is currently $13.61 million per person for 2024. This translates into $27.22 million for a married couple.
Massachusetts has its own estate tax system, and the exemption is $2 million per person; but, it is a “use it or lose it” exemption, meaning that if a married couple has a $4 million estate and they own all of their assets jointly or have each other named as beneficiary, when the second, surviving spouse dies with a $4 million estate, there will be Massachusetts estate tax of $180,800 due. If you “use” the $2 million exemption on the first spouse’s death through a credit shelter trust, you could reduce or even eliminate the Massachusetts estate tax liability when the second spouse dies.
Couples should be aware of these thresholds and talk to an estate planning attorney about estate planning strategies such as gifting or setting up trusts to minimize their tax liability.
4.Advanced planning for long-term care (nursing home) costs.
If you and your spouse have the gift of time, then you need to think about how you will pay for long-term care costs in the future. Long-term care planning involves preparing for the potential need for nursing home care. Although long-term care is primarily associated with older adults, it can be necessary for anyone with chronic illnesses, disabilities, or injuries that limit their ability to perform daily activities. According to the U.S. Department of Health and Human Services, 70% of Americans aged 65 and over can expect to use some form of long-term care during their remaining years.
There are different estate planning strategies that married couples can use to ease the cost of long-term care and preserve assets in the event they need to apply for Medicaid.
Growing old together also means planning on taking care of each other financially if one of you needs care.
5.Don’t be scared to discuss a prenuptial agreement.
Before you say “I do”, consider a prenuptial agreement to protect your assets in the event of divorce. Many couples don’t want to talk about a prenuptial agreement because no one wants to talk about divorce before you’re even married. But you can protect your wealth, your family business, and even children from a prior marriage from losing out on an inheritance by entering into a prenuptial agreement. Consider a prenuptial agreement if your assets or circumstances are such that you want added assurance that no matter how matters of the heart may go, your assets and your children will be protected.
Knowing these aspects of estate planning can help couples protect their assets, ensure their wishes are carried out, and provide for their loved ones. There is nothing more romantic than presenting a well-thought-out estate plan to your partner (said the estate planning attorney).
Attorney Brittany Hinojosa Citron is an associate attorney with 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.
June 2024
© 2024 Samuel, Sayward & Baler LLC
Five Ways to Protect your Estate
When we meet with clients for their estate planning, I ask them about their goals. One of the most frequent answers I hear is that they want to ‘protect their estates.’ Of course, my next question is, from what? There are a variety of risks that estate planning can address when timely and properly undertaken. Read on for five ways to protect your estate from risks that can negatively impact the estate, and legacy, you intend to leave.
1. Protect your assets from long-term care costs.
One of the biggest concerns people have when they are planning their estates is that their assets will be consumed by their long-term care costs. Given the very high cost of such care, whether provided at home or in a long-term care facility, this is a valid concern. While many people think Medicare will cover long-term care costs, it does not. Advance planning to protect assets from spend down on long-term care costs often includes creating and funding an irrevocable trust. Depending on age, health and financial circumstances, purchasing a long-term care insurance policy which provides financial assistance for services like home care, assisted living, or nursing home care is another excellent way to protect a legacy from loss to long-term care costs.
2. Protect the inheritance you leave your beneficiaries
It is essential to thoughtfully decide how your assets will be distributed upon your passing. If you have minor children or beneficiaries with special needs, it is critical that assets not pass directly to these beneficiaries but instead pay into a Trust for them. A person with a disability who is receiving or may be entitled to receive public benefits may lose those benefits if they receive an inheritance.
Under the law, a minor is not legally able to receive assets. As such, if a minor is named as a beneficiary, a court appointed conservator will be required to collect the benefit on behalf of the minor. The conservator will need to manage the assets and report to the court on an annual basis – time consuming and expensive. Once a beneficiary turns age 18, the beneficiary is entitled to receive the asset – often another bad result.
Leaving an inheritance to beneficiaries in trust is often beneficial even if your beneficiaries are non-disabled adults. An inheritance that passes outright to beneficiaries is subject to the easy reach of their creditors such as a divorcing spouse, failed business, lawsuit, etc. Structuring your estate plan to leave the inheritance to your beneficiaries in trust will protect it from the easy reach of those creditors.
3. Protect your estate from avoidable costs and taxes
One key aim of estate planning is to minimize expenses and taxes that can diminish the value of your estate. Estate taxes can significantly reduce the assets you leave behind. Strategies like creating trusts, gifting assets during your lifetime, and making use of tax exemptions can help reduce the impact of estate taxes.
Furthermore, the way your assets are titled and structured can affect administrative costs. Proper titling of assets and careful planning can avoid probate and streamline the estate settlement process, saving both time and money for your beneficiaries.
4. Protect your unique assets
If you possess unique assets like a vacation home, valuable art, or collectibles, it’s crucial to incorporate them into your estate plan. These assets often hold sentimental value and can be a significant part of your legacy. The last thing most people want is to have their heirs fighting over their possessions following their deaths.
To protect and preserve these unique assets, your estate plan should clearly outline how they should be managed or distributed. You might consider creating a family trust to oversee the vacation home’s usage and maintenance, or specifying how your art collection should be appraised and distributed among your heirs.
By planning for these unique assets, you preserve your legacy by ensuring they continue to hold value and significance for your loved ones in the years to come.
5. Protect your privacy
Maintaining privacy is a fundamental aspect of estate planning. When you work with an estate planning attorney, you can establish measures to safeguard your personal and financial information.
One critical tool for privacy protection is the revocable living trust. Assets titled in a trust will avoid probate, a public court process that exposes your estate details to the public record. This means your assets can be distributed privately, without the need for public disclosure.
Additionally, working with professionals who understand the importance of confidentiality ensures that your affairs remain private during the estate settlement process. Protecting your privacy not only shields your financial matters from unnecessary public scrutiny but also preserves your family’s confidentiality during a potentially challenging time.
In conclusion, protecting your estate and preserving your legacy involves a comprehensive estate plan that considers various factors, from minimizing long-term care costs and taxes, safeguarding the inheritance you will leave, and planning for your unique assets. Working with an experienced estate planning attorney will help you tailor a plan that aligns with your specific goals and priorities, ensuring that your legacy is preserved and passed on as intended.
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.
October, 2023
© 2023 Samuel, Sayward & Baler LLC
Leaving A Legacy of Love (& Money)
A client recently asked me, “Is there anything that can be done now to protect my daughter and grandchildren’s inheritances?” Happily, I was able to explain that there are two tools available to safeguard the client’s legacy for her loved ones. These tools are prenuptial agreements and lifetime trust shares, which allow people to protect their wealth and ensure that their hard-earned assets are preserved for future generations.
If your adult child is not yet married, the best way to protect an inheritance is to execute a prenuptial agreement. A prenuptial agreement is a legally binding contract that is completed prior to marriage. It outlines the assets and rights of each person in the event of divorce or death which will supersede state law so long as the prenuptial agreement is determined to be valid. The prenuptial agreement can “carve out” assets, such as potential inheritances and gifts from parents, which will remain with your child in the event of a divorce instead of being divided between your child and the divorcing spouse. Your child and fiancé must each be represented by separate attorneys to provide advice and negotiate the prenuptial agreement. The prenuptial agreement should be started at least six to nine months prior to the date of the marriage ceremony.
In addition to your child executing a prenuptial agreement, you can take action by creating an estate plan that includes a lifetime trust share for your child. You can prepare a Trust now that upon your passing will hold and manage assets for your child for that child’s lifetime, or even for the lifetime of a child’s descendants (your grandchildren). Although your child (and grandchildren) can benefit from the funds held in the trust share during their lifetime according to the terms that you put in place, the assets are not as vulnerable to division between your child and a divorcing spouse because your child does not have total ownership and control of the assets.
To best preserve family wealth for multiple generations, your child should execute a prenuptial agreement and you should create an estate plan containing a lifetime trust share for your child. At Samuel, Sayward & Baler LLC, we strive to provide you with the peace of mind that you are taking all the steps necessary to afford your family financial security and stability, and protect your legacy for generations to come.
Attorney Abigail V. Poole is a senior associate 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. She is an active member and current President 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 ssbllc.com or call 781/461-1020.
September, 2023
© 2023 Samuel, Sayward & Baler LLC
Five Ways to Take Care of Your Pets in Your Estate Plan
A recently released preliminary study suggests that owning a pet for five or more years may slow cognitive decline in adults 65 years of age or older. As someone who grew up with pets and recognizes the joy, humor, companionship and other benefits that pet ownership provides, that study got me thinking about what could be done to care for the critters that enrich our lives when we become incapacitated or pass away. To start with, the ASPCA suggests creating a contact list of caretakers and documenting your pet’s food, medication and behaviors for emergency purposes. In addition to those recommendations, here are five ways to include your pets in your estate plan, to make sure they are taken care of if you are not able to do so.
- Memorandum
Your Last Will and Testament directs the distribution of your assets after you pass away, including your pets. If you have a specific individual you wish to take custody of and care for your pet after you pass, you may list the pet and individual on a Memorandum. The Memorandum is incorporated by reference into your Will yet permits you to update it if you later get another pet or change your mind about who you would like to care for your pet.
- Gift for Pet Caretaker
The Will can also include a provision that gives a specific amount of money to the selected pet caretaker in order to assist with anticipated veterinary expenses, food, toys, etc. for your pet. Such gifts are usually small, ranging from $1,000 to $40,000, in my experience, depending on the age of your pet and the pet’s anticipated needs.
- Revocable Living Trust Pet Sub-Trust
If you already have a Revocable Living Trust as part of your estate plan and would like to gift a larger amount of money to your pet’s caretaker but prefer that the funds are managed by someone else, then a simple pet sub-trust as part of your Revocable Living Trust may be a good option.
Since 2011, residents of Massachusetts have been permitted to create trusts for the benefit of their pets. The trust is legally binding and must benefit a pet that is alive during the trust creator’s lifetime. There is a manager (Trustee) appointed to administer and distribute the trust money to a separate person who is the pet’s caretaker. The trust describes the purposes for which money may be distributed to the caretaker for the pet’s benefit, such as grooming, training, veterinary care and more. If the amount held in trust is challenged, the court may determine if it is excessive in connection with the needs of the pet, and reduce the amount so long as it will not negatively impact the care, maintenance, health or appearance of the pet. The trust ends at the death of the last surviving pet and directs that the remaining funds, if any, are distributed according to other terms of the trust.
- Stand-Alone Pet Trust
If you are contemplating setting aside hundreds of thousands or millions of dollars to pay for your pet’s expenses because the pet has a long life expectancy or significant health care needs, a stand-alone pet trust may be a better fit for you. But keep in mind that funding the trust with millions of dollars may spell Trouble – as in the pet trust created for Leona Helmsley’s dog, Trouble, who the court determined did not require $12 million dollars to pay for the pup’s lifetime care, and redirected the distribution of a majority of those funds to others. While the stand-alone pet trust must adhere to the same Massachusetts laws mentioned above, it also allows you to include more complex wishes regarding the compensation of the Caretaker and Trustee, and the distributions for your pet’s benefit, such as transportation expenses, boarding, euthanasia and disposition of remains, and more.
- Your Durable Power of Attorney
The above documents address the care of your pet after your passing, but what if you are alive and can no longer care for your pet yourself due to incapacity? In such situations, your Attorney-in-Fact under your Durable Power of Attorney may step in. Your Power of Attorney may direct that your assets may be used to pay for food, medical treatment and other necessities, including keeping your pet at home as long as possible, as your Attorney-in-Fact decides appropriate.
At Samuel Sayward & Baler LLC, we recognize that pets are cherished family members. Happily, there are many options available to ensure your pet is well cared for in the event of your incapacity or death, and we will guide you through the process of determining the best way to provide for them in your estate plan.
Attorney Abigail V. Poole is a senior 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 and President-Elect 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, 2022
© 2022 Samuel, Sayward & Baler LLC
Five Situations Where an Estate Is Ripe for Catastrophe
“Handling my father’s estate after his death was a nightmare – I don’t want to leave the same kind of mess for my children.” This is a comment I regularly hear from clients who are meeting with me to create their own estate plan because they want to make it as easy and painless as possible for their family to settle their estates after they pass away. The good news is that there are steps you can take now to ensure the administration of your estate goes smoothly. Here are five situations where difficulties commonly arise during the administration of an estate, and what you can do now so that your children aren’t saying the same thing after your death.
1. Unclear Tangible Personal Property Distribution Wishes
Surprisingly, or perhaps not so surprisingly, tangible personal property distribution can prolong the administration of an estate. Tangible personal property consists of your personal items – for example, vehicles, clothing, furniture, art work, collectibles, and jewelry. I regularly assist Personal Representatives who encounter conflict among beneficiaries (recipients of estate assets) over the distribution of tangible personal property because of its sentimental value.
One way to reduce potential conflict over the distribution of tangible personal property is to create an itemized list of your important tangible personal property and the beneficiaries to whom you wish those items to be distributed. Another way is to give away the items while you are alive and able to do so.
2. Out-of-Date Estate Plans
Your financial assets, goals and who you designate to manage your estate when you are 35 years old is likely to be different when you are 50 years old and then again when you are 70. If you appointed a family member, friend or professional as your Personal Representative or Trustee who has since died or become incapacitated, it may be difficult to find someone else willing to take on the responsibilities of administering your estate. Additionally, the beneficiaries to whom you wish to distribute your estate after your death may be very different. Perhaps your adult children are now financially well-off and you want only your grandchildren to benefit from your estate assets. Or perhaps you intended a certain asset, such as a house, to be distributed to one of your adult children but you are now estranged from that child and prefer your house to be distributed to another.
A good rule of thumb is that you should review your estate plan to ensure it has the appropriate people designated to administer your estate and receive your estate assets whenever the relationship, health or financial circumstances of you and/or your beneficiaries change, or about every five (5) years.
3. Blended Families with Adult Children
One specific situation that is ripe for conflict is a blended family. Oftentimes the spouses of a second or third marriage bring with them significant assets and adult children who may expect to inherit their parent’s assets soon after their parent’s death. You may unintentionally create strife between your surviving spouse and your adult children by giving your assets to your surviving spouse who uses them to pay for significant health care expenses and leaves nothing for your adult children. Or, your adult children may have poor interpersonal relationships, known or unknown to you, which may have a negative impact on the administration of your estate if an adult child is selected to be Personal Representative or Trustee.
You can reduce the likelihood of conflict among your children and surviving spouse after your death with a prenuptial agreement and estate plan. You can enter into a prenuptial agreement that outlines what happens to your assets at your death as well as divorce. The prenuptial agreement informs and works hand-in-hand with your estate plan documents. Some couples create an estate plan together with the same estate planning attorney and others prefer to retain separate estate planning attorneys.
4. A Voluminous Number of (Forgotten) Assets
Take a moment to think about all of your assets. Do you have any old bank accounts in another state? Or stock certificates or savings bonds tucked away somewhere? What about one or more life insurance policies stashed in a safe deposit box only you can access? How about an ownership interest in real estate in another state with another family member? The more assets you have, the more time-consuming and complicated the administration of your estate will be.
To make things easier on your Personal Representative or Trustee after your death, there are a few things you can do now. Carefully consider if you need to have multiple savings accounts or if you can consolidate them. Periodically check the unclaimed property divisions of states in which you have resided for stock dividends or forgotten bank account balances and file a claim to obtain the property. Create a list of all your assets, update it regularly and let a trusted family member or friend (and your estate planning attorney!) know where to find the information in case something happens to you.
5. Do Nothing
A guaranteed, surefire way to make the administration of your estate difficult is to do absolutely nothing. It may result in forgotten assets appearing later which will require a late and limited probate proceeding. Doing nothing could lead to your estate assets passing to distant relatives, if any, or to the Commonwealth of Massachusetts. Doing nothing may cause a public administrator to be appointed to administer your estate in a way you did not intend.
Do something. If you are reading this article, you have already taken an important first step to learn more. Now take the next step and meet with an experienced estate planning attorney to create or update your estate plan.
A knowledgeable estate planning attorney will guide you through the steps necessary to avoid leaving a mess for your family to deal with after your death. From advising you to designate the appropriate beneficiaries of your retirement accounts to creating an estate plan for your blended family to periodically getting in touch with you to remind you to review and update your estate plan, the attorneys at Samuel, Sayward & Baler LLC are here to assist you so that the next generation will visit their attorney and say, “my father had his estate plan in place and made it easy for us to administer – I want to do the same for my children.”
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 and Vice President 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.
November, 2021
© 2021 Samuel, Sayward & Baler LLC
Make Updating your Estate Plan a Priority
There’s nothing like a pandemic to make people worried about dying – that’s something we learned all too well during the past year. Here at Samuel, Sayward & Baler, we were grateful that we all remained healthy and able to help our clients – both old and new – create and update estate plans that gave them peace of mind.
Now that the end of the pandemic is in sight, consider this a friendly reminder that reviewing and updating your estate plan is not something that should only happen when you are in pandemic-induced lockdown. It’s something you should do on a regular basis – review things once a year, and meet with your estate planning attorney to review things (whether you think you need to or not) every five years or so, or sooner if you know changes are needed.
Updating your plan is important for any number of reasons. Here are some things you should ask yourself when reviewing your existing documents:
- Are the people named in your Power of Attorney and Health Care Proxy to make financial or health care decisions for you still trusted people you can count on to be there if you are not well?
- Is your Executor/Personal Representative named in your Will and the Trustee of your Trust still a trusted individual you can count on to settle your estate and administer your Trust fairly and efficiently at your death, working with your attorney, accountant and financial advisor?
- If the people you have named are getting older or are not well, do you have appropriate alternates named to take their place if they cannot (or do not wish to) serve in those roles when the time comes?
- Do your documents still reflect your current wishes about the distribution of your assets at death? Does your Will or Trust refer to assets, such as real estate or a business, that you no longer own?
- Have you recently been divorced? Melinda Gates is updating her estate plan in light of her divorce, and you should too!
- On a happier note, have you recently been married, had a baby, won the lottery or received an inheritance? Those type of events should also prompt a review and update of your estate plan.
In addition to the things you know should be changed, there may be other provisions of the documents that need to be updated as well. For example, provisions of your Will and Trust regarding how estate taxes will be paid may not operate as intended if certain assets are no longer owed, or if beneficiaries have been changed. The federal estate and gift tax laws, laws governing inherited retirement accounts, and Massachusetts probate or trust laws have all changed within the last ten years, making many provisions of older documents out-of-date.
Unfortunately, this past year has taught us that life and health are unpredictable. Although having an estate plan is an important first step, keeping that plan up-to-date is just as important, as a plan that’s out-of-date can often create more issues than no plan at all. Make it a priority to review your plan today, and sit down with your estate planning attorney to discuss any necessary updates. They will be happy to see you alive and well and keeping your estate plan up-to-date, since it will make their job easier when you are no longer around.