Estate Planning

SSB Partners with Honoring Choices

March 3, 2017 by ssb_admin

Samuel, Sayward & Baler recently joined with Honoring Choices as a Community Partner. The mission of Honoring Choices is to help individuals make their health care wishes known and to ensure those wishes are carried out. As a Community Partner, SSB will help adults in our area make their health care wishes known through the creation of Health Care Proxies and medical directives, and by creating Durable Powers of Attorney that will enable a trusted individual to handle their financial affairs if they are unable to act for themselves. We look forward to working with Honoring Choices and their other Community Partners in this endeavor.

March 2017

We Get Around

February 27, 2017 by ssb_admin

Our attorneys have been out and about in the community, speaking about the importance of estate planning and continuing our education series on matters related to our practice areas.

In November, all of our attorneys attended the Massachusetts Bar Association’s day-long Probate Law Conference, which is always an informative event. This year’s highlights included the Probate Court’s move toward electronic filing of probate documents and further clarification of the best way to ensure clear title to real estate passing through the probate estate. Additionally, Attorney Greenfield chaired the annual Massachusetts Continuing Legal Education Program, “The MassHealth Process from Application to Approval,” in Boston.

In December, Attorney Baler gave a presentation on Powers of Attorney at the Westwood Senior Center in conjunction with our new community partner, the Honoring Choices program (see separate article on this program). Attorney Greenfield testified at a public hearing in Worcester regarding changes to proposed MassHealth regulations (see article on proposed changes).

February 2017

Employer Sponsored Retirement Plans: What You Need to Know

February 27, 2017 by Attorney Steven Samuel

While many employers offer retirement accounts as an employee benefit — even those that offer generous matching contributions — many do not offer adequate education on how to choose among the investments offered in the retirement plan. If you have engaged a financial professional to advise you, make sure that their advice about your overall investment strategy incorporates the money in your (and your spouse’s) retirement accounts. If you don’t have a financial advisor and don’t have the time to educate yourself about investments, Target Date Funds (TDFs) may be a reasonable alternative if you do a bit of research yourself. Here are the basics of what you need to know:

Employer Sponsored Retirement Account Basics

If you are employed and eligible to contribute to your employer sponsored retirement plan, congratulations! Your employer is giving you the opportunity to contribute much more than the IRS maximum allowable contribution amount for Individual Retirement Accounts (IRA). Maximum contribution to a company retirement account in 2017 is $18,000 ($6,000 more if you are over 50 years old) compared with $6,500 to an IRA. And, your employer may match some of your contribution. That’s free money and worth a conversation with your employer to find out if you are eligible to contribute, as well as determine if you are taking full advantage of this opportunity.

Contributing to an employer sponsored retirement plan also requires choosing among the several investments offered by most plans. Investment choices are typically mutual funds and there may be many dozens from which to choose. Unless you are an experienced investor or have help from someone who is, deciding what funds to invest in and when to make changes bewilders most employees. If your employer offers employee education, it will be time well spent; and, if you are an employee who has a financial advisor, make sure to ask for help with retirement plan investments — something many advisors overlook. If none of these options apply to you, consider TDFs.

Target Date Funds

TDFs automatically spread an employee’s contribution among a mix of mutual funds that hold stocks, bonds and cash in proportions targeting a specific year of retirement. About ten years ago, the U.S. Department of Labor began allowing the use of TDFs in retirement accounts. TDFs alter the mix of stocks, bonds and cash, by reducing the percentage held in stocks and shifting the allocation toward more conservative investments the closer you are to retirement.

TDFs aren’t managed by the investor, who may make panicked decisions during turbulent markets that they may later regret. But, not all TDFs are alike. Before investing in a TDF, it is important to understand how it invests and adjusts its mix of stock, bonds and cash over time as well as what the TDF costs.

TDF Glide Path, Costs and Other Investments

Glide path is the name TDFs give to the timing of changes in the mix of investments as the years pass toward the targeted retirement, analogous to an airplane moving through take off and voyage to landing. Some TDFs have a glide path that move entirely to cash at the target date, others continue to hold a significant amount of stock through the early retirement years or even through the entire retirement. Because the percentage of stock in an account is a major factor in how an account will perform during market up and down times, it is important to know and be comfortable with a TDF glide path before investing in it.

Some employees have not only an employer sponsored retirement account, but also a spouse’s employer retirement account and perhaps other investment accounts. If you choose a TDF, check whether its mix of stocks, bonds and cash is consistent with the investment strategy in your other accounts.

Investing in a TDF costs more than putting money in individual mutual fund choices offered through an employer sponsored retirement plan. TDFs offer the additional service of choosing the funds and adjusting the stocks, bonds and cash mix, so some additional charge is justifiable. However, some TDFs add more than 1 percent per year to the other costs of the retirement plan and can be a major drag on performance.

As always, when you have questions about important financial matters, consult your trusted financial advisor.

Investments in target date funds are subject to the risks of their underlying holdings. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative investments based on its respective target date. The performance of an investment in a target date fund is not guaranteed at any time, including on or after the target date, and investors may incur a loss. Target date and target retirement funds are based on an estimated retirement age of approximately 65. Investors who choose to retire earlier or later than the target date may wish to consider a fund with an asset allocation more appropriate to their time horizon and risk tolerance.

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.

Five Reasons to Call an Estate Planning Attorney

February 1, 2017 by Attorney Maria Baler

Maria_144px Estate planning attorneys work with clients every day to ensure their wishes are carried out in the event of illness or death. While it’s not pleasant to think about, planning ahead will make it easier for your loved ones during difficult times. An estate planning attorney can help you create documents (such as a Will and/or Trust) that provide instructions about distribution of your assets at death, minimize probate expenses and estate taxes, name guardians for minor children, and manage inherited assets for your beneficiaries. An estate planning attorney can also help you plan for incapacity by creating powers of attorney and health care documents that allow individuals you choose to make financial and health care decisions on your behalf.

Some estate planning firms advise clients on elder law matters — how to plan for long-term care (both pre-planning and addressing a crisis situation when the need for care is imminent), how to pay for that care (including whether you are eligible for public benefits such as Medicaid benefits), and whether advance planning is appropriate.

Here are five reasons you should call an estate planning attorney.

You are a parent. If you are the parent of a minor child (defined as under the age of 18 in Massachusetts) you should have a Will that names a legal guardian for your child. Parents of minor children and young adults should also consider creating a Trust that will hold and manage assets for your child’s benefit, to ensure your child does not receive control of inherited assets at age 18, and to designate a trusted individual to manage those assets for your child until your child reaches an age that you deem is appropriate. If an adult child has substance abuse, gambling, or creditor problems, or is in a bad marriage, it may be appropriate to hold assets in trust to protect the assets and ensure they will be available for the child’s benefit in the future.

You (or your spouse) receive a serious medical diagnosis. If you have a serious illness, sitting down with your estate planning attorney may not be at the top of your list. However, it is important to plan while you are competent to make decisions about your future. If you or your spouse need long-term care or anticipate the need for care in the future because of physical or mental decline, an estate planning attorney with knowledge of elder law can advise you about estate plan documents you should have in place and about your options for care and payment. Make it a priority to become educated about your options and work with an attorney to make a plan for the future.

You are getting married or divorced. Marriage and divorce both impact your existing estate plan and necessitate changes to your documents. If you do not have an estate plan in place, these events provide a good reason to plan. An attorney can also help you review asset ownership and beneficiary designations to ensure a new (or ex-) spouse is provided for (or not) as appropriate. Prior to marriage, an estate planning attorney will help you determine whether a prenuptial agreement is appropriate. These agreements can protect assets owned prior to marriage (such as an interest in a family business or vacation home) or assets that are inherited during the marriage in the event of death or divorce. Prenuptial agreements are also important in second marriages to protect assets for children from a prior marriage.

You have a spouse, child, grandchild or other beneficiary who has a disability. If you wish to leave assets to a disabled individual you need to take special care with your estate plan documents. Leaving an inheritance to a disabled beneficiary may cause a loss of benefits, including medical benefits. Leaving an inheritance in a properly drafted Trust can preserve eligibility for benefits and protect assets for the benefit of the disabled beneficiary.

You have not reviewed your plan in a while. If you have a Will, Trust or other estate plan documents, it is important to keep your plan current. If it has been more than five years since you have met with an attorney to review your plan, take the time to do so. A few simple amendments to your documents may be all you need to bring your plan up to date. Even if more significant changes are needed, make those changes to ensure your plan will work as you intend, save time and expense, and minimize taxes — both for your benefit and for the beneficiaries of your estate.

You can find more information about these topics, including many articles on estate planning and elder law at www.ssbllc.com.

Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a 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.

February 2017

Happy Anniversary to the Massachusetts Estate Tax!

January 19, 2017 by Attorney Maria Baler

Maria_144px As a follow-up to my July 2016 blog commemorating the 100th anniversary of the federal estate tax, and as promised in that post (and better late than never), we are recognizing the less-significant-but-still-worth-commemorating 40th anniversary of the Massachusetts Estate Tax.

The Massachusetts estate tax, like the federal estate tax, is a transfer tax that taxes the value of a decedent’s estate before the estate assets are passed on to the heirs who receive assets from the estate.

Before the current version of the Massachusetts estate tax (enacted in 2003), the tax was a so-called “sponge” tax, calculated based on the credit provided by the federal estate tax for estate tax paid to a state. When the federal government began phasing out its estate tax in 2001, Massachusetts “decoupled” from the federal estate tax, and implemented its current system of computing a separate state estate tax equal to the federal credit for state death taxes as it existed on December 31, 2000.

So when does a Massachusetts estate tax return have to be filed? The estate of every resident of Massachusetts who dies with an estate valued at $1 million or more must file a Massachusetts Estate Tax return within nine months of the date of death. If you are not a Massachusetts resident but own real estate in Massachusetts, you must also pay an estate tax to the Commonwealth at your death, assuming the total value of your estate is over $1 million.

What is an “estate”? In the estate tax world, your “estate” consists of any asset you own or control. So, for example, your home, your bank accounts, your investment accounts, your IRAs or 401k, your car, and your life insurance (if it is owned by you) are all assets that together constitute your “estate” and are countable when determining if your estate is worth more than $1 million at the time of your death.

If you have to file a return, will you have to pay tax? The answer is “it depends.” No matter how valuable your estate, if you leave your assets all to your spouse or all to charity, you will not have to pay any estate tax. Assets left to anyone else are subject to estate tax, which must be paid within nine months of the date of death. Unlike the federal estate tax, if the estate meets the $1 million filing threshold, the full value of the estate (less a $60,000 exemption) is subject to Massachusetts estate tax, not just the amount in excess of $1 million. The estate tax is computed on the value of the taxable estate (the value of your assets less deductions for funeral expenses, administrative expenses, debts, and assets passing to charity or a spouse), with rates ranging from 0.8% to 16% for estates in excess of $10 million.

If taxable gifts (gifts made in excess of the gift tax annual exclusion) are made during a deceased person’s lifetime, the total taxable gifts are added to the value of the estate on the date of death to determine whether or not the value of the estate is in excess of the $1 million filing threshold and an estate tax return must be filed. However, the estate tax is computed only on the value of the assets owned by the deceased on the date of death.

The Massachusetts Department of Revenue chose to celebrate the Massachusetts estate tax’s 40th anniversary by implementing the electronic filing of estate tax returns. An exciting development for those of us in the estate tax world, or at least it promises to be once the kinks are worked out!

If you have questions about the Massachusetts estate tax, whether your heirs may have to pay tax, how much they may have to pay, and what can be done to reduce the estate tax owed, call our office and schedule a time to meet with one of our estate planning attorneys. Estate tax planning is one of our favorite things to do!

January 2017

Five (Good) Reasons to Treat your Children Differently in Your Estate Plan

January 1, 2017 by Attorney Suzanne Sayward

Sue_144px A while back, I wrote an article that focused on some of the reasons clients give for deciding to treat their children differently in their Wills and why. In my experience, those reasons were usually not worth the problems that arose from those decisions (i.e Will contests, damaged family relationships, etc.). I called that piece Five (Not So Good) Reasons to Treat your Children Differently in your Estate Plan. However, there are in fact some good reasons for treating some children differently. Here are five circumstances in which it is prudent to consider treating a child differently than his or her siblings.

A child with disabilities is receiving needs-based governmental benefits. Parents of a child who has special needs such as autism, Down syndrome, or other disability that makes it unlikely the child will ever be self-supporting must take care to ensure that their child is cared for following their deaths. Individuals with disabilities may be entitled to receive governmental benefits to pay for food, shelter, medical care or other expenses. Many of these benefits are available only if the individual with disabilities meets certain financial criteria, which may include a limitation on the amount or type of assets the person owns. Leaving an inheritance directly to a child with disabilities is likely to cause the child to be ineligible for benefits. However, parents can leave assets to a child with disabilities in a so-called Special Needs Trust or Supplemental Needs Trust to provide for their child without interfering with the child’s eligibility for needs-based governmental benefits such as SSI and Medicaid.

A child has a mental illness that affects his ability to manage money. If a child is bi-polar or suffers from another mental illness that interferes with his ability to manage money in a mature manner, it is important that parents safeguard that child’s share of the estate. Creating a trust that provides for the prudent management of assets for the child is an excellent way to do so. In the Trust document the parents will name a Trustee to manage the trust assets for the child at the parents’ deaths. That Trustee might be a family member, family friend or professional such as an attorney, CPA, bank or trust company. Although the Trustee does not need to be a professional money manager, the Trustee does need to be someone who is responsible and trustworthy and who will seek the advice of professionals in managing the Trust assets.

A child has an addiction disorder. If a child is addicted to drugs, alcohol, or gambling, it is imperative that parents take this into consideration when planning their estate. Leaving even a modest inheritance to a child who may injure himself with a drug overdose or lose their legacy in a gambling spree is not how any parent wants a child’s inheritance to be used. Setting up a trust to manage the child’s assets is an excellent way to provide for a child who has an addiction disorder while safeguarding the inheritance.

Your child is in the midst of a situation that would jeopardize his inheritance such a divorce or bankruptcy. Sometimes a child’s situation is precarious but temporary, such as a divorce, bankruptcy or lawsuit. These are circumstances that will eventually be resolved and assuming they are not chronic, parents would otherwise want to leave their assets outright to the child rather than in trust. However, while these circumstances exist, protecting the child’s share from the reach of a divorcing spouse or loss to a creditor is crucial. Parents can change the terms of their estate plan to address the crisis and then revise the plan once the child’s situation is resolved.

Your child is a spendthrift. This is a tricky one. Although some parents disapprove of their children’s spending habits, this does not necessarily mean that the children are spendthrifts in the true sense of the word. Wikipedia defines a spendthrift as “someone who spends money prodigiously and who is extravagant and recklessly wasteful, often to a point where the spending climbs well beyond her or his means.” The key here is that the person spends well beyond her means. So where one person may consider a weekly massage an extravagance, another may deem it a necessity. For estate planning purposes the issue is not so much how your child spends her money, but whether she can afford to spend the money she spends. If your child has filed for bankruptcy (perhaps more than once) because of overspending (as opposed to as a result of a medical problem, for example), has lost, or almost lost her home to foreclosure, or is often short of money to pay the rent, mortgage or electric bill, yet still takes the children to Disney every year or treats herself to a Mediterranean cruise, she might be a spendthrift. Parents of a spendthrift child are often conflicted – they love their child and do not want to exclude her as a beneficiary. On the other hand, they find it painful to think about leaving a spendthrift child any part of the estate they worked so hard to build when they believe it will be squandered. Estate planning to ensure that a spendthrift child does not receive a lump sum distribution may include creating a trust for the child’s share or providing that the child receive a monthly income rather than an outright distribution.

A parent’s decision to treat children differently should never be made lightly. Treating children differently in one’s estate plan not only significantly increases the likelihood of a Will contest, it often causes a serious, and sometimes irreparable, breach in sibling relationships after the parents have passed away. However, there are circumstances, such as those described above, when it is necessary to do so. If you have a child in any of the circumstances described above or if you are considering treating one of your children differently than the others in your estate plan, consult with an experienced estate planning attorney to determine the best way to structure your plan.

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

January 2017

Tis the Season for Gifting- but what about the taxes?

December 15, 2016 by Attorney Suzanne Sayward

Sue_144px Presents! Fun to give, fun to get, but what about taxes? Since we are smack-dab in the middle of gift-giving season it seems like a good time for a primer on the tax consequences of making and receiving gifts. Here are a few things to keep in mind.

A Gift is not taxable income to the recipient. Gifts are essentially free money to the recipient. If my dad gives me $10,000 this is not income to me – I do not have to report it on my income tax return.

A Gift to an individual is not income tax deductible by the gift giver but a gift to a qualified charity is. When my dad gives me that $10,000 he cannot deduct that on his income tax return. However, if he gave that money to the American Cancer Society instead of to me, it would be deductible on his income tax return. Gifts to so-called qualified charities are deductible up to 50% percent of a taxpayer’s adjusted gross income. A 30% limitation applies to contributions to private foundation. The IRS publishes a booklet which explains the rules for deductibility of charitable gifts in detail.

Most people don’t need to worry about gift tax. The gift tax seems to be the most misunderstood tax in the tax code. First of all, the gift tax is a federal tax only (except if you live in Connecticut). The key aspects of the federal gift tax are:

In 2016 each person may give $5,450,000 during their lifetime before there is any gift tax payable ($5,490,000 in 2017). This amount is sometimes called the “lifetime credit” or “lifetime exemption”. So if you do not make gifts in excess of $5,450,000 (twice that amount if you are married), you need not worry about the gift tax.
In addition to the lifetime exemption amount, each person may make annual gifts of up to $14,000 to as many people as they wish. This is called the annual exclusion amount. For example, if Mr. Trump gives his daughter Ivanka a business worth $5,450,000 this year, he may also give all of his children, including Ivanka, an additional $14,000 in 2016 and there would not be any gift tax due.
If a person does give more than the allowable exemption amount, then the gift giver (not the recipient) will owe federal gift tax on the amount in excess of the lifetime credit amount at the rate of 40% (ouch!). So if the value of the business given to Ivanka is $6,450,000 then Mr. Trump will owe gift tax of $400,000 (40% of $1 million).
A person may make unlimited gifts to a U.S. citizen spouse and there is no gift tax payable. For example, if one spouse gives the other a big office building worth $100 million, there is no gift tax payable. But, if the spouse receiving the gift is not a U.S. citizen then the amount of the gift is limited to $148,000 in 2016 (increasing to $149,000 in 2017), and there would be gift tax due on the amount of the gift in excess of the allowable amount.
The federal gift tax is linked to the federal estate tax. Current federal estate tax laws allow each person to pass on $5,450,000 (2016) at death without any federal estate tax. However, to the extent a person ‘uses up’ some or all of that lifetime credit by making taxable gifts during his or her lifetime, the gift giver reduces the amount of the credit available at his or her death. In the above example where Mr. Trump used his entire lifetime credit by giving his daughter his business, then the full value of the assets Mr. Trump owns at his death will be subject to federal estate tax at the rate of 40% (unless of course he has repealed the federal estate tax, but that’s a topic for another day).

Capital gain tax can be an unwelcome surprise for gift recipients. Most people are familiar with capital gain tax which works like this: Dad buys 100 shares of Microsoft stock for $1,000 in 2000. In 2016, that stock is now worth $10,000. If he sells the stock, he will have a gain of $9,000 ($10,000 – $1,000) on which he will have to pay capital gain tax. If Dad gives the stock to Daughter, he will have made a gift of $10,000 – the current value of the gift. As we know from above, there are no gift tax implications to either Dad or Daughter. Even though Daughter received a gift worth $10,000, her tax basis in the stock is the same as Dad’s – $1,000. That means that when Daughter sells the stock, she will have to pay capital gain tax just like Dad would have had to pay.

If instead of giving the stock to Daughter as a gift, Dad kept the stock and then Daughter inherited it when Dad passed away, Daughter’s tax basis in the stock would be the market value of the stock on the day Dad died. That means that if the stock was worth $10,000 when Dad passed away and Daughter sells it for $10,000 she will not have any capital gain ($10,000 – $10,000 = $0) and will not have to pay any tax – a sweet result.

There are no freebies when it comes to Medicaid eligibility. Medicaid is that state and federally funded program that provides funds to pay for long-term care nursing home care (and other care costs) for individuals who meet the financial eligibility requirements of the Medicaid program. In order to be eligible, a person cannot have more than $2,000 in countable assets. There is a 5-year ineligibility period if an applicant, or his/her spouse, gives away assets. Although there are exceptions to this rule, such as gifts made to a spouse or to a disabled child, there are no exceptions for the amount of a gift. The annual gift tax exclusion amount described above has no bearing on, or relation to, the Medicaid rules.

The bottom line is that while gift tax may not be an issue for most people who are considering making a large gift, there are other issues to be concerned about. Consult with your estate planning attorney so that you understand the implications and can make an informed decision before making gifts. Have a happy holiday and may you be on the receiving end of some of those gifts!

December 2016

Five Ways to Be Proactive About Your Care Choices

December 1, 2016 by Attorney Maria Baler

Maria_144px Many of my clients have definite ideas about how they want to be cared for if they are ill later in life. I hear clients expressing very clear wishes about where they want to live and what type of care they wish to receive and do not wish to receive. With planning and communication, you will have greater certainty that your wishes will be carried out. Here are five ways to plan ahead for the type of care you envision for your future:

See your Attorney. Your estate planning attorney can help you create legal documents that can go a long way toward ensuring you will receive the type of care you want. The first is a Power of Attorney that will appoint a trusted person to handle your financial affairs if you are unable to do so. Your appointed agent will be able to use your assets to pay for whatever care you may need. The second is a Health Care Proxy that names a person to make health care decisions for you if you are unable to do so. The third is a HIPAA Authorization that will list individuals who have permission to receive information from your physicians and others about your medical care.

See your Doctor. A conversation with your physician is an important step in deciding what type of care you wish to receive and clearly expressing your wishes about your care preferences. There are many medical directive forms available that allow you to be very specific about the care you would like to receive in particular situations, including end of life care. It is wise to complete these forms and express preferences after you have had a conversation with your doctor in order to understand the options and the implications of each care choice. The care you choose may be very different from that of another person, based on your age, your health, your personal experiences, and your personal preferences. Making clear and educated choices about your health care now will allow your Health Care Agent to make health care decisions for you based on your known wishes, rather than having to guess about what your wishes may be.

Educate Yourself About Housing Options. Where do you want to live as you age? Many people are firm in their desire to remain at home for as long as possible, even if they require help to do so. There are more resources than ever to receive care at home. Individuals called Aging Life Care Managers (also sometimes called Geriatric Care Managers) can assist in evaluating the type of assistance needed and coordinating those who will provide care or assistance at home. There are also many options for those who do not wish to stay in their home as they get older. Learn about the housing options available in the area you wish to live and the cost. If you are a person who enjoys being socially active, a continuing care retirement community may be a good choice. There, you can have your own apartment, but join others for activities or for meals if you choose. If you want a quieter setting, a senior housing complex where everyone has their own apartment may be preferable. If you need assistance with things like cooking, bathing, dressing or transportation, an assisted living facility may be appropriate. If you need skilled care, nursing home care may be required.

Understand how you will pay for care. If you need assistance or care at home, or in an assisted living facility or a nursing home, there will be a cost associated with that care. Care costs may be paid with your monthly income (Social Security, pension) or your assets (proceeds from a home sale, cash, investments, etc.). If you have long-term care insurance, those benefits can be used to pay or defray the costs of care. If you do not have assets or insurance to pay for care, you may be eligible to receive Medicaid benefits, which are the public benefits that pay for long-term care (at home or in a nursing home) for individuals who are unable to pay the cost of their own care. Eligibility for Medicaid benefits can be complicated. If you think you may need Medicaid benefits to pay for care in the future, take the time now to consult with an elder law attorney and understand the eligibility rules and how they apply to your particular situation.

Identify and Inform your Team. No matter how certain you are about the type of care you wish to receive, you can be sure your wishes will not be carried out if no one but you knows what they are. Plan in advance by identifying a team of individuals who will help you carry out your wishes – your attorney, your financial advisor, your Health Care Agent, your attorney-in-fact, and an Aging Life Care Manager are all important members of the team. Involve these individuals early on in your planning process. Express your wishes to them clearly and repeatedly. Share with these individuals the health care documents your attorney has prepared or those you have completed with the assistance of your physician so they can ask you questions and get a good sense of your wishes before a crisis occurs.

Take these steps while you are able to put appropriate legal documents in place, express your housing and care preferences, and communicate those preferences to the people who will help you carry them out. Your family will thank you for being proactive and giving them a roadmap for your future care.

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

December 2016

Time for the Big Leagues—Irrevocable Trusts Get Called Up to the SJC

November 15, 2016 by Attorney Pamela Greenfield

Pam_144px After more than half a decade of uncertainly and speculation surrounding irrevocable income only trusts in the MassHealth context, the highest court in Massachusetts has decided to weigh in on the debate in deciding to review the Nadeau and Daley cases. Hopefully a decision from the Supreme Judicial Court (SJC) sometime next spring will finally provide elder law attorneys and their clients with more defined guidelines as to what provisions these trusts may include in order to protect trust assets from liability for long-term care costs.

While the Heyn decision issued by the Massachusetts Appeals Court back in May 2016 marked the first precedential victory for irrevocable trusts since the 1990s, it left many questions unanswered. Most notable was the question of whether language in a trust that explicitly gave the grantor (the creator of the trust) the right to use and occupy the home owned by the irrevocable trust made the property “countable” for the purpose of qualifying for MassHealth/Medicaid benefits in a nursing home. As the property transferred into an irrevocable trust in the MassHealth planning context is often the grantor/MassHealth applicant’s primary residence, the right to use and occupy the home was beneficial to the grantor for many reasons including tax, mortgage and general notions of control and protection. MassHealth has taken the position that an explicit right to use and occupy the property gives the grantor a level of control that makes the value of the asset “available” to the grantor. The result of this “availability” is that the trust assets are deemed “countable” to the grantor which means the trust prevents the applicant from obtaining benefits since the assets exceed the MassHealth financial limit. Alternatively, the property may be able to be returned to the applicant so that the state can place a lien the property and recoup the value of the benefits provided upon the applicant’s death. This is the primary provision the SJC will review under the Nadeau and Daley trusts and it affects many, many seniors across the state.

While the two cases before the SJC are similar in that they both present the “use and occupancy” issue, they are different in ways that some elder law attorneys believe may yield a bizarre result. The Daley case deals with a life estate deed and an irrevocable income only trust while the Nadeau case focuses primarily on the use and occupancy provisions contained within the trust itself. The Daley case also raises procedural and constitutional issues such as the inconsistency of administrative hearing decisions and other due process concerns. In any case, the SJC has decided to hear both cases together and the decision will certainly provide more clarity on the use of irrevocable trusts in the future as well as how existing trusts will fare should the grantor apply for MassHealth benefits.

Stay tuned on the irrevocable trust saga as it continues to unfold over the coming year!

Pamela B. Greenfield

Five Reasons to Plan if your Estate is More than $1 Million

November 1, 2016 by Attorney Suzanne Sayward

Sue_144px Estate planning is important for every adult regardless of the size of your personal fortune. If your estate is more than $1 million, you have additional planning concerns and goals to address. When you consider the high real estate values in Massachusetts and the recent stock market trends, estates of $1 million or more are not as unusual as they used to be. Here are five reasons estate planning is especially important for larger estates.

Estate Tax. The Estate Tax is a transfer tax imposed on the value of assets that an individual owns at his or her death and is “transferred” to beneficiaries at death. There is a federal estate tax that very few people need to worry about since it is only imposed on taxable estates in excess of $5,450,000 (2016 amount). However, many people are not aware that Massachusetts imposes its own estate tax and that it applies to estates that are $1 million or more. Since the $1 million exemption is granted to each taxpayer, this means that a married couple has the opportunity to pass on $2 million free of Massachusetts estate tax. However, they can only do that if they do some estate planning. Since this planning will save about $100,000 for beneficiaries, it is worth doing, unless of course the Commonwealth of Massachusetts is your beneficiary of choice!

Preserving Privacy. Avoiding probate is a common estate planning goal because clients have heard that probate is expensive and takes a long time (both true!). There is another important reason to pass your estate to your intended beneficiaries outside of probate and that is to preserve your privacy. The Personal Representative of an estate must prepare an Inventory itemizing all of the probate assets and a detailed statement called an Accounting reporting all of the revenue received by the estate and all of the disbursements from the estate. This information must be filed with the Probate Court if the Personal Representative wants to obtain a decree declaring that the Personal Representative has completed the settlement of the estate satisfactorily. Many Personal Representatives want this blessing from the court as it means that no one can sue the Personal Representative for matters related to the estate settlement. The issue is that Probate Court records are, for the most part, public records available for perusal by anyone who wants to look at them (think nosy neighbors and greedy relations!). For those with larger estates (which may include a business, commercial real estate, or rental property), avoiding probate takes on an additional benefit in that it makes it much harder for someone to make a claim against an estate or challenge the provisions of a Will. Estate planning will allow you to pass your estate to your beneficiaries outside of probate, which will reduce the time and expense associate with estate settlement and preserve your privacy.

Asset Protection. Let’s face it – the more you have the more there is to protect. If you have worked hard your whole life and built an estate of $1 million or more, or if you have had the good fortune to receive an inheritance, you don’t want to lose it to a lawsuit, nursing home, or taxes, and you don’t want your children to lose their inheritance because of any misfortunes or a divorcing spouse. Assessing the risk to your estate from various “creditors and predators”-’ and exploring the options for minimizing or eliminating those risks is part of the estate planning process. Just as there are a myriad of risks, there are a variety of ways to address those risks. Each person’s situation is unique and the perfect solution for one person is not necessarily the right solution for the next person.

Easing the burden for the people who will settle your estate. One of the most common goals clients have is to make it as easy as possible for their families to settle their estates. Although not always the case, larger estates are usually more complex to settle. Putting your affairs in order by making sure your estate plan is up to date, that you have funded your Trust if you have created one, and that your instructions are clear is the best way to ease the burden on those left behind.

Leaving a legacy. For many people, leaving a positive and lasting impact on the world is very important. Whether it is touching lives as a teacher, performing relief work in a third world country or creating a reading program at the local library, leaving a legacy means creating a lasting impression for good. A legacy is not about money, but money can allow a person to create a foundation or make a gift that will continue to touch lives long after the giver is gone.

If you have an estate of $1 million or more, you no doubt worked hard to acquire it. If you haven’t taken steps to preserve your fortune for your intended beneficiaries from risks such as estate taxes, probate costs, and creditors and predators, don’t wait to do so. Meet with an experienced estate planning attorney who can advise you about your particular situation and help you ensure that your goals are met.

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

November 2016