Estate Planning

Ask SSB

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Q:       How do I choose who to name as my executor, power of attorney, and health care agent?  I don’t want to hurt any of my children’s feelings.

A:        It can be hard to decide who to name to these roles, especially if you think a child will be upset if not chosen.  While you don’t want to make a child feel slighted, the duties and obligations of your executor (now called a Personal Representative), Attorney-in-Fact under your durable Power of Attorney, and your Health Care Agent are substantial and you must appoint a person who can carry out these responsibilities. The role of Personal Representative and Attorney-in-Fact require a person who is well-organized, not a procrastinator, and willing and able to move a project forward to a conclusion.  He or she should be able to work well with others, such as attorneys and accountants, and also get along well with family members and keep them informed.

Your Health Care Agent should be someone you are comfortable speaking with about your health care wishes and who you can trust to carry out your instructions.  Your health care agent should be able to communicate with your health care providers, not be afraid to ask questions or request explanations, and be able to advocate for you if necessary.

In complex situations or where significant discord between family members is expected, a non-family member may be the best choice.  In any event, you should discuss your concerns with an experienced estate planning attorney who will help you make the right choices.

September 2017

© 2017 Samuel, Sayward & Baler LLC

What Surprises and Worries Retirees?

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If you’re old enough to be thinking about retirement, one way to get some insight is to ask individuals who have already retired. That’s what the Wall Street Journal (WSJ) did recently, and though many of the retirees’ reports do not seem all that surprising, they are worth attention if you are within 10 years of retirement or already retired. Here’s some of what WSJ reader retirees reported.

Money and Health

Worries about money (48%) and health concerns (42%) are at the top of the list for keeping retirees up at night. Of the 48% who worry most about money, more than half were concerned about not having saved enough to last their lifetime to accommodate their basic lifestyle needs. Almost a third were concerned they might not have enough even for emergencies and health care costs. For people worried about money, expenses for their cars, travel, healthcare and household exceeded what they had spent before retirement. A recent report of the Employee Benefit Research Institute cited in Financial Advisor, supports the view that travel and other household expenses are actually higher for at least the first two years of retirement than during work years, for close to half of newly retired persons. Many of the people who reported having money and health concerns said they were particularly surprised at how high their Medicare premiums were.

Relationships

Relationships were another area of concern, mainly the fear that leaving work will mean missing out on being part of the team or work “family.”  Retirees who dealt successfully with relationship concerns said that willingness to take risks was key. An example of taking risks was learning something new, which often was rewarded by successful second careers and new relationships. First time exercise classes, volunteering or part-time work had similar results for many people. Some WSJ readers said they were surprised at how quickly they shed their work lives and began to enjoy “the luxury of time” …. an unhurried life and control over the day’s activity or inactivity.  The most poignant comments about relationship concerns were the comments about mortality. For those whose spouses, partners or close friends passed away before they were able to enjoy each other in retirement, regret about time not well spent was profound.

Rewards of Planning

Careful retirement planning paid off for many retirees. Examples cited include researching decisions on when to file for Social Security, with a variety of different views given on the subject. Some favored waiting until age 70 to maximize social security payouts while others preferred taking it earlier to allow minimum use of savings. Understanding Medicaid choices and costs was another “careful planning” topic, as was reducing debt before retirement.

Some retirees did not plan well or perhaps at all. Although the WSJ reader report is not a scientific random sample survey, it offers a cautionary counterpoint to the suggestion that expenses during retirement are less than during work years.  Putting together a solid estimate of current and expected expenses and understanding Medicare do not require a great deal of time or cost. If you haven’t done this research yet, spending an hour with your checkbook and credit card statements and the Medicare website (www.medicare.gov) and your trusted advisor is a good first step. Updating your conclusions each year as your retirement timing goal gets closer will allow you to avoid surprises.

Samuel Financial LLC is located at 858 Washington Street, Dedham, MA 02026 and can be reached at 781.461.6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser. Fixed Insurance products and services offered through CES Insurance Agency.

Planning for Your Digital Assets

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Digital assets did not exist 25 years ago, but they are now part of our everyday existence.  Things like the contents of our Facebook, Twitter and Instagram accounts, photographs stored online, digital music, YouTube videos, on-line gaming accounts, domain names, and email are all digital assets – a collection of our digital property and electronic communications.  To the extent these accounts contain information that you would like someone to be able to access after your death or incapacity, it is necessary to plan to provide the appropriate authority and instructions for what you want done with these “assets.”  For some types of these assets, planning is crucial to prevent financial loss (i.e. the loss of a domain name used for business purposes), to protect sensitive personal information (on-line dating websites), to avoid identity theft, and to allow access to valuable assets (think bitcoin, an author’s manuscript, or family photographs).

Most of us create digital assets without a thought as to what will happen to those “assets” if we are no longer around or able to access them.  Even if you share your password for your on-line accounts with a trusted person, keep in mind that it is a violation of federal law for anyone other than you to access your accounts (because password sharing is prohibited under most terms of service agreements) unless the person with whom you share your password has the legal authority to access your account.

This is an emerging area of estate planning.  The Uniform Fiduciary Access to Digital Assets Act (UFADAA) is an attempt to create some clarity in this area.  Massachusetts is one of only a handful of states that has not enacted this law, or even introduced it for consideration.  Hopefully our state legislature will not delay much longer.  The law allows fiduciaries to take action to marshall and protect the digital assets of the deceased or incapacitated person on whose behalf they are acting.  As a rule, access is difficult to obtain because on-line providers all have different policies or terms of service agreements with their customers.  The Uniform Act’s purpose is to bring some uniformity to these policies as they relate to fiduciaries, and to extend a fiduciary’s power over assets in a deceased or incapacitated person’s “estate” to include digital assets, giving a fiduciary the legal right to access online accounts.

The Massachusetts Supreme Judicial Court is in the process of deciding the case of Ajemian v. Yahoo!, Inc.  In this case Mr. Ajemian died with a Yahoo email account, and  Yahoo would not allow access to his account to his siblings who were the administrators of his estate.  This case has been bouncing around the court system since 2007 on procedural grounds, including whether the case had to be decided by a California court (where Yahoo is located) or whether the case was properly decided in Massachusetts where Mr. Ajemian was a resident prior to his death.  The Court now seems poised to decide the substantive issue of access to emails, after oral arguments in March of this year.

Here are some tips to manage your digital assets until Massachusetts law and a path to access becomes clearer:

  • If an online entity offers a way for you to give permission or access to your digital assets stored with that company, pay attention and follow the directions. For example, Facebook allows you to designate a Legacy Contact (Settings/General Account Settings/Manage Account) who can manage your account after your die, or you can choose to have your account deleted if you pass away. Google allows you to control what happens to your account through their Inactive Account Manager feature (My Account/Personal Info and Privacy/Control your Content).  Here you can designate when your account will be considered inactive and what will happen to your Google account, and designate one or more people who will have access to whatever portions of your Google account you choose.
  • Update your estate plan documents, specifically your Power of Attorney, Will and Trust, to ensure those documents provide express permission for the fiduciaries named in those documents to access your digital assets, and express direction regarding what should be done with specific digital assets at death. In our office, we include express permission for access in these documents, and provide our clients with a Digital Assets Memorandum that can be used to record instructions about digital assets.

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

September 2017

© 2017 Samuel, Sayward & Baler LLC

5 Questions about Estate Planning – A Quiz

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With the abundance of information available to everyone today, including so-called ‘fake news’, it is not surprising that my clients sometimes have misconceptions about estate taxes, trusts, probate, and other estate and elder law matters.  In the spirit of the back-to-school season, here is a quiz to test your estate planning knowledge.

Q. True or False. You only need to worry about paying estate tax if your estate is worth more than $5 million.

A. False. The estate tax, sometimes referred to as the death tax, is a transfer tax.  That means that the value of the assets a person owns at death and passes on to his beneficiaries is subject to a tax.  There is a federal estate tax and many states impose their own estate tax.  To mitigate the harshness of the tax, the law permits each person to pass on a certain amount free of the estate tax (the exemption amount).  The federal estate tax exemption is $5,490,000 per person in 2017.  Given this very high amount, very few people need to be concerned about the federal estate tax.

However, Massachusetts has its own estate tax which allows for a $1 million per person exemption.  A person’s ‘estate’ for estate tax purposes includes real estate, bank accounts, investments, retirement accounts, life insurance, and all other assets. Given the high value of real estate in Massachusetts and the recent robust stock market, many people in Massachusetts have estates valued in excess of $1 million.  It is especially important for married couples to be aware of the value of their estates because they will lose one of those $1 million ‘freebies’ if they do not do any planning.  If that happens, their beneficiaries can end up paying the Commonwealth $100,000 or more of tax that could have been avoided.

Q. True or False. If you have a trust, the inheritance you leave your child will be protected from the reach of a divorcing spouse.

A. True, provided your trust contains the right provisions. Many of my clients worry that the inheritance they leave to their children will be lost if their child gets divorced following the parents’ deaths.  This is a valid concern, especially in Massachusetts where an inheritance is considered marital property unless there is a prenuptial agreement that excludes it.  Leaving a child’s inheritance to her by way of a trust is an excellent way to protect that inheritance from the reach of your child’s creditors including a divorcing spouse, lawsuit, bankruptcy, etc. provided that the trust provides for a continuing lifetime share for your child.  In these types of trusts, a child’s share stays in the name of the trust for the benefit of the child during her lifetime.  Your trust may allow your child to serve as the trustee (manager) of her share, or it may appoint someone else to manage the share for your child.  However, if the terms of your trust direct that the assets be distributed out of the trust to your child following your death, then you are not providing any creditor protection for that inheritance because those assets are now owned in your child’s individual name.   Assets owned in your child’s individual name are vulnerable to the reach of your child’s creditors.  You can incorporate asset protection for your child’s inheritance in your trust, thereby achieving three goals:  probate avoidance, estate tax savings (for married couples), and creditor protection for your child’s inheritance.

Q. True or False. If your spouse is in a nursing home, the state will place a lien on your house.

A. False, maybe. If a person over the age of 55 receives Medicaid (MassHealth) benefits, whether in the community or in a nursing home, the state may recover the cost of those benefits from the Medicaid recipient or his estate under certain circumstances.  If a Medicaid recipient owns an interest in real estate, whether in his individual name, as a co-owner with another person, or as a life estate holder, the state will place a lien against the property to secure its right to recover the amount of the Medicaid benefits it paid if the property is sold during the Medicaid recipient’s lifetime. The state will also file a claim against the estate of a Medicaid recipient to recover the amount of Medicaid benefits paid following the recipient’s death.

However, state and federal regulations provide that if the Medicaid recipient’s spouse is living in the home, then the state may not place a lien against the home. Therefore, if one spouse is receiving Medicaid, the state cannot file a lien on the property so long as the other spouse is living in the home.  But if the non-Medicaid recipient spouse dies first, the property is then at risk for a Medicaid lien.  Because of this, it is very important for individuals who have a spouse facing long term care to meet with an elder law attorney to ensure that their assets are properly titled to avoid a lien or post-death recovery.

Q. True or False. If you have a trust you don’t need a durable Power of Attorney.

A. False. A trust is often created for probate avoidance purposes. The way this works is that during the trust-maker’s lifetime, she re-titles her assets such as real estate, bank accounts and investment accounts into the name of her trust.  For example, Mary Jones’ bank account would no longer be in Mary’s individual name; instead the name on her account would be, ‘Mary Jones, Trustee of the Mary Jones Trust.’  If Mary becomes incapacitated, then the person she named as the successor trustee of her trust would be able to manage the trust assets for Mary’s benefit.  However, retirement assets (IRAs, 401Ks, 403bs, etc.), for example, cannot be retitled in the name of a trust; they must be owned in the individual’s name.  The Trustee of Mary’s trust will not have any legal authority over the retirement accounts.  As such, Mary needs to create a Durable Power of Attorney in which she appoints someone to manage non-trust assets for her should she become incapacitated.  In addition to dealing with non-trust assets, the person appointed in the Power of Attorney would also undertake tasks such as filing Mary’s income tax returns, applying for long-term care benefits, dealing with insurance matters, etc.

Q. True or False. Probate is not necessary if you have a Will.

A. False. Whether or not an asset needs to be probated is solely a function of how that asset is owned by the deceased.   For example, if I have a bank account in my name alone when I die, the bank will not simply give the money to my husband or my children.  The Personal Representative (formerly called Executor) of my estate is the only person who has the authority to access the funds in the account, or any other asset I may own in my individual name and which does not have a beneficiary designated to receive that asset at my death.  Further, it is not sufficient for the person who I have named as my Personal Representative in my Will to show up at the bank with my Will in hand and demand access to my account.  My Personal Representative must file for probate and obtain Letters of Authority from the court which will prove that he has the authority to access the account.

If you answered all of the questions correctly, does that mean I recommend that you create your own estate plan?  Of course not!  In my experience, everyone’s situation is different and has its own unique ‘twists’ which are usually not adequately addressed by ‘canned’ estate plan documents that can be found on the internet.   If you have questions about probate, Wills, Trusts or estate tax planning, call us to schedule an appointment and you can ‘quiz’ us!

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

September 2017

© 2017 Samuel, Sayward & Baler LLC

Helicopter Parenting from Heaven?

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Many parents and grandparents look at the way their children and grandchildren manage their financial lives and shudder.  In some cases, this is simply a matter of the older generation disapproving of the way the younger generation spends money because it is not how they spend their money.  In some cases, there is real cause for concern when thinking about a particular person inheriting a substantial sum of money.  We counsel clients frequently about how a trust is an excellent way to safeguard a child’s inheritance from the reach of creditors and from the child’s own bad judgment.  A so-called ‘incentive’ trust takes this idea a bit further by using incentives to encourage specific desirable behavior or discourage a particular bad behavior.  For example, a trust maker may stipulate that a beneficiary will receive distributions from the trust only if she graduates from college or remains employed for a certain period of time.  Similarly, an incentive trust may condition distributions on the beneficiary remaining drug-free for a certain period of time. A recent trend has trust makers including a requirement that a beneficiary complete a course of education in financial management as a prerequisite to the beneficiary receiving a distribution or being permitted to serve as Trustee of his or her trust share.

For those for whom an incentive trust seems intriguing, keep in mind that it is vital to build in flexibility.   For example, if the trust maker wants to encourage higher education by making distribution of the funds to the beneficiary conditional on the beneficiary graduating from college, it is important to acknowledge that college is not for everyone.  If the money in the trust is intended to be used to pay for a beneficiary’s college tuition, then the trust maker may want to condition those payments on the beneficiary maintaining a certain grade point average or limit payments to 4-years of college.  The trust maker should also specify what will happen if a beneficiary does not graduate from college – will that person receive nothing?  Will she receive a smaller amount?

When including incentives, the trust maker should be aware that there are laws that make trust provisions that violate public policy unenforceable.  For example, a provision in a trust that stipulates that a beneficiary will only receive a distribution from the trust if she divorces her spouse will not be upheld if challenged as a number of courts have found promoting divorce to be against public policy.

If you are interested in ‘incentivizing’ your beneficiaries, give us a call to schedule a meeting with one of our attorneys to discuss your vision.

August 2017

© 2017 Samuel, Sayward & Baler LLC

Five Things a Well-structured Estate Plan Can Do For Your Children

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As you spend time with your children and grandchildren during the lazy days of summer, it is a good time to think about your estate plan, and whether it is structured in a way that takes care of your family.  Here are a few ways a good estate plan can protect and provide for your children:

  1. Protect the inheritance you leave your children. If you pass away before your children are mature or experienced enough to responsibly manage the assets they inherit from you, those assets may very well be lost to your children’s creditors or poor judgment.  Some risks to a child’s inheritance include substance abuse, persistent friends in need of money, failed marriages, bankruptcy, irresponsible spending and lawsuits.  A Trust can hold your child’s inheritance and name a Trustee to manage and protect those funds for your child.  The Trustee can use the Trust assets for your child’s benefit for reasons the Trustee determines are appropriate, or for reasons you specify in the Trust.  These could include making sure your child can pay tuition, pay for a wedding, buy a home, or start a business.  The Trustee can manage the assets for your child’s lifetime or for a specific period of time (for example, until age 35).

 

  1. Protect a disabled child’s benefits. If you have a child that receives needs-based government benefits because of a disability, or may need those benefits in the future, your estate plan should include a trust for the benefit of your child.  A supplemental needs trust that receives and manages the assets your child inherits will allow those assets to be used for the benefit of the child throughout the child’s lifetime, but will not disqualify the child from receiving any needs-based benefits the child may now or in the future be eligible to receive.  A Trust can also be used to hold the child’s own assets in order to protect those assets and facilitate eligibility for benefits.  If you have other family members who want to leave assets for the benefit of a disabled child, make sure they understand that proper planning is important to ensure that inherited assets will not affect the child’s eligibility for benefits.

 

  1. Ensure future vacations at the family vacation home. For children young and old, the family vacation home is a special place that parents often want to pass on to future generations.  Careful planning can ensure that long-term care costs and estate taxes do not get in the way of your family being able to keep the vacation home and continue to enjoy it.  Considerations about managing and paying for a vacation property are also important issues to address when planning for such a property.  A Limited Liability Company, trust, or co-ownership agreement can create a structure for dealing with issues such as use of the property, shared expenses, maintenance and repairs, and rentals.  A well-structured plan will also make provisions for the death or disability of an owner, and the buy-out of an owner’s share if they pass away, become disabled, or just want out.

 

  1. Ensure that your minor children are properly cared for in the event of your death. If you’re lucky this summer, you may be able to get away for a weekend with your spouse and leave your young children at home with your parents or friends.  Most parents prepare for a weekend away by leaving instructions behind about caring for the children while they’re away.  Think of an estate plan as a set of instructions for how your children should be cared for if you are not there.  Although it is difficult to contemplate the possibility that you may pass away leaving young children, planning for that possibility will ensure that your children are in a far better position than if you did no planning.  Planning ahead means that you are the one who chooses the people that will take care of your children, not the Court.   Creating an estate plan means you can make your house available for your children and their guardian to live in, so your kids can stay in the family home, continue to go to school with their friends, and graduate from high school in the town they grew up in.

 

  1. Help your children with health care decisions. Children who are age 18 or older are adults in the eyes of the law.  This means that they make their own health care decisions.  If your college-age student is ill, her doctor cannot share medical information with you without your child’s permission. If your child’s condition means that she is not able to grant that permission, you may find yourself unable to obtain information or make decisions about your child. A health care proxy is a document by which your child can name you to make health care decisions for her if she is unable to make those decisions herself.  Your child can sign a HIPAA Authorization to give permission for physicians and other medical professionals to speak with you and release information.  These are simple documents that can make access to information and decision-making possible in the event of a child’s unexpected illness.

The peace of mind that comes with good planning will help you enjoy your summer vacation. If you haven’t gone through the estate planning process, the summer is a good time to consider how you would want your plan to provide for your family, and take the first step in putting that plan in place.  Time flies and summer will be over before you know it, so don’t wait!

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). 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.

July 2017

© 2017 Samuel, Sayward & Baler LLC

Long-Term Care Planning

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To all of our clients who are looking to cross something off their to-do list this summer, check out this interesting read  from last week’s “Your Money” Section of The New York Times.  It’s never too early to start the conversation about long-term care planning!  This article shows us that even people who consider themselves well-prepared financially and legally can be affected by unexpected circumstances and care costs.   If you are in your 50’s or beyond, make sure you have had a conversation with one of our attorneys about for any long-term care you may require and what planning steps you may want to take now to plan for the unexpected.

July 2017

© 2017 Samuel, Sayward & Baler LLC

Five Facts to Know about Irrevocable Trusts

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In my estate planning and elder law practice, many clients express curiosity about Irrevocable Trusts, wanting to know what an Irrevocable Trust is used for and how it works.  Here are five things to know about Irrevocable Trusts.

1. An Irrevocable Trust has beneficiaries who have rights to the Trust property. It is a common misconception about Irrevocable Trusts that no distributions can be made from the trust.  That is not true.  Very often, a parent or grandparent will create an Irrevocable Trust for the benefit of a child or grandchild.  The parent or grandparent may want to make a gift but does not want the beneficiary to have unlimited access to the gifted funds.  This could be because the beneficiary is young, has a disability, or simply has not demonstrated good judgment in money matters in the eyes of the grantor (the person creating the trust and making the gift).  The grantor may also want the gifted assets to be protected from the beneficiary’s creditors.  The grantor will specify in the trust document when and for what reasons the Trustee (think “manager”) may make distributions from the trust for the beneficiary.  For example, the trust might direct the Trustee to pay the beneficiary’s education or health expenses. Alternatively, the trust may permit the Trustee to use the trust funds for the benefit of the beneficiary for whatever reason the Trustee determines to be appropriate.

2. Under some circumstances, an Irrevocable Trust can be amended. As a general rule, the person who creates an Irrevocable Trust cannot amend it.  However, some Irrevocable Trusts contain a provision allowing someone else to amend the trust.  For example, parents who have a child with disabilities will often create an Irrevocable Trust to ensure that the assets the parents leave for the child will not cause the child to lose eligibility for government benefits.  These trusts may include a provision permitting the Trustee to amend the trust if the law changes and impacts the trust, causing the child to be ineligible for such benefits.

3. The Trust creator can retain the right to change the ultimate beneficiaries. A person who creates an Irrevocable Trust can retain the power to change how the trust property will ultimately be distributed – this is called a power of appointment.  For example, say Mary creates an Irrevocable Trust that states that when she dies, the trust assets will be distributed to her three children in equal shares.  After the trust is created, Mary’s son Alan becomes embroiled in a nasty divorce.  Mary is worried that if she dies while the divorce is ongoing, that Alan’s one-third of the trust property could end up going to Alan’s soon-to-be-ex-spouse.

Even though Mary’s trust is irrevocable and she cannot sign an amendment changing the trust terms, Mary can change how the trust assets will be distributed at her death via her Will because she reserved a power of appointment over the trust assets.  A reserved power of appointment over the ultimate distribution of the trust assets allows Mary to change the distribution so that Alan’s share of Mary’s trust assets will not be reachable by Alan’s divorcing spouse.

4. The Trust creator may still be considered the owner of the assets in the Irrevocable Trust. When you transfer assets to an Irrevocable Trust, you may or may not still be the “owner” of the assets in the trust for tax purposes. Sometimes it is advantageous to be deemed to be the owner and sometimes it is not.  For example, life insurance is taxable in the insured’s estate for estate tax purposes if the policy is owned by the insured.  If the policy is large and the insured has a taxable estate, this means that between 10 and 40 percent of the life insurance proceeds will be lost to estate taxes.  If the insurance policy is owned by an Irrevocable Life Insurance Trust, then the life insurance policy will not be deemed to be owned by the insured and the proceeds will not be taxable in the insured’s estate.  On a $1 million life insurance policy, this could save between $100,000 and $400,000 of estate tax.

On the other hand, sometimes it is desirable to be deemed to be the owner of Irrevocable Trust property for tax purposes.  For example, say Harry has a total estate of $850,000.  He has a house that he bought for $30,000 many years ago and that is now worth $350,000 and CDs totaling $500,000.  Harry does not need to be concerned about estate taxes because his total estate is valued at less than $1 million and there is no Massachusetts estate tax on estates of less than $1 million (the federal threshold is $5,490,000).  However, Harry should be concerned about capital gain tax.  If he is not the “owner” of his house for tax purposes when he passes away, then when Harry dies there will be capital gain tax payable on the difference between Harry’s tax basis in the property ($30,000) and the sale price ($350,000).  The capital gain tax on $320,000 ($350,000 — $30,000) would be about $64,000.

If the Irrevocable Trust included provisions that caused Harry to be deemed to be the owner for tax purposes, then when the house is sold following Harry’s death, there would be no capital gain tax payable because the house would receive a “stepped-up” basis at Harry’s death.  This means the tax basis in the house is equal to the fair market value at Harry’s death.

5. The person who creates the Irrevocable Trust may be the beneficiary. Clients often assume that if they transfer assets to an Irrevocable Trust they give up all rights to the assets.  This is not necessarily true. A very common Irrevocable Trust used for long-term care planning is an Irrevocable Income Only Trust.  In this type of trust, the grantor (the person creating the trust) receives the income generated by the assets in the trust.  For example, let’s say that Jane owns a three-family rental property and is worried that if she needs long-term nursing home care, the property will be consumed by the costs of that care.  She doesn’t want to give the property to her children because she is worried about her children’s creditors (divorcing spouse, bankruptcy, tax lien, etc.).  In addition, Jane wants to keep receiving the rental income.  Jane can transfer the property to an Irrevocable Income Only Trust and continue to receive the net rental income.  After the five-year ineligibility period for gratuitous transfers has passed, the property in the Irrevocable Trust would not be deemed to be owned by Jane in the event she applies for Medicaid (MassHealth) benefits to pay for her long-term care under the current law.

These are just five facts to know about Irrevocable Trusts.  If you want to know more about whether an Irrevocable Trust is right for your situation, contact an experienced estate planning to discuss your goals.

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

July 2017

© 2017 Samuel, Sayward & Baler LLC

Protecting your Child’s Inheritance from the Reach of a Divorcing Spouse

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On May 11, our firm’s bi-monthly Smart Counsel presentation focused on the best way to protect the inheritance you will leave to your children from the reach of your child’s spouse in the event of a divorce.  There were two parts to our program.  First, family law attorneys Barbara Nason and Amy Vaughn  spoke about how a good prenuptial agreement can protect a child’s inheritance in the event of divorce.  Attorneys Nason and Vaughn shared with attendees the “must-haves” if the prenuptial agreement is going to be effective.  These included the requirement that each party have his/her own attorney and that the parties fully disclose their assets, liabilities and expectancies to each other. This means that the parents of the engaged couple need to provide their child with information about the amount the child may expect to inherit.

The second part of the program concentrated on how to protect your child’s inheritance in the event he/she does not have a good prenuptial agreement in place.  Attorney Suzanne Sayward advised the audience that leaving assets to your children in trust rather than outright can be an effective way to protect the beneficiary’s inheritance, provided the Trust is properly drafted and administered.

If you are concerned about protecting the inheritance you plan to leave your children from the reach of their creditors, including a potential divorce, call us to schedule a meeting with one of our attorneys to discuss your options.

June 2017

© 2017 Samuel, Sayward & Baler LLC

Dementia Friendly Massachusetts

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The Massachusetts Executive Office of Elder Affairs has a new initiative to raise awareness about the prevalence of dementia in our state, in an effort to make our communities and those who live in them more “friendly” to those who suffer from dementia.  Did you know that one  in eight older adults in Massachusetts has Alzheimer’s disease or a related disorder?  Nearly 60 percent of those with dementia live in their own communities.  One in seven of those with dementia lives alone.

Those who suffer with this disease, and their caregivers, need support, and Massachusetts is one of the states taking the lead in this “dementia friendly” initiative.  Please watch this short 2.5-minute video to learn more about the Dementia Friendly Massachusetts Initiative. We were so pleased to see our wonderful clients Al and Jackie DeMeo in the video.  Hopefully it will inspire you to work with others to make your community safer, more inclusive, and respectful for residents affected by Alzheimer’s disease and related dementias.

June 2017

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