Estate Planning

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

© 2017 Samuel, Sayward & Baler LLC

SJC Issues Favorable Decision for Irrevocable Income Only Trusts

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On May 30, 2017, the Supreme Judicial Court vacated the judgments of the Worcester County Superior Court companion cases, Daley and Nadeau, concluding that the right to use and occupy a residence does not make the assets contained within an irrevocable income only trust countable for MassHealth purposes.  The cases, which were argued before the SJC on January 5, 2017, will undoubtedly have a significant impact on the landscape of asset protection planning for long-term care purposes as the previously unsettled case law made it difficult for seniors to effectively plan for future nursing home care costs.  Irrevocable income only trusts, which were historically time-tested tools for protecting a nursing home resident’s home from a MassHealth lien, have been at the epicenter of elder law litigation since 2009.  With a favorable SJC decision on these cases, elder law attorneys and their clients can breathe a sigh of relief regarding previously created trusts which allow the grantor to continue to live in the home transferred into the irrevocable trust.  Going forward, elder law attorneys can feel more confident about advising their clients on the use of these protective instruments.

Click here to read the decision:

http://www.mass.gov/courts/docs/sjc/reporter-of-decisions/new-opinions/12200.pdf

Click here to read previous posts on this issue:

https://ssbllc.com/blog/masshealths-treatment-of-irrevocable-income-only-trusts-as-murky-as-ever/

https://ssbllc.com/blog/irrevocable-trust-update-favorable-decision-from-the-massachusetts-appeals-court-is-a-battle-won-but-not-the-end-of-the-war/

https://ssbllc.com/blog/time-for-the-big-leagues-irrevocable-trusts-get-called-up-to-the-sjc/

https://ssbllc.com/blog/options-to-protect-the-primary-residence-from-long-term-care-costs/

If you have specific questions about protecting your home from long-term care costs, please call our office  at 781/461-1020 and schedule an appointment with one of our attorneys.

June 2017

© 2017 Samuel, Sayward & Baler LLC

Five Ways in which a Trust is Better than a Will

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Sue_144pxWills and Trusts are both estate planning documents used to pass assets on to beneficiaries at death.  However, there are distinct advantages to using a Trust over a Will.  Here are five ways in which a Trust is better than a Will to pass your estate to your beneficiaries.

  1. A Trust can be used to Avoid Probate – a Will cannot. Probate is the process of changing the title on assets when someone passes away.  Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died. In order for family members to gain access to accounts or other assets in the deceased’s individual name, they must file a petition with the probate court and wait for the court to approve the Will and appoint the Personal Representative.  This can be a long and costly process during which bills cannot be paid and assets cannot be managed.  A Trust is an excellent probate avoidance tool because assets that are owned in the name of a Trust are immediately accessible to the trust-maker’s designated successor.
  1. A Trust can provide Creditor Protection for the Inheritance you Leave to Beneficiaries – a Will cannot. Many people worry that the inheritance they leave to their children will be lost to their children’s creditors such as a divorcing spouse, unpaid credit card bills, a bankruptcy, a business loss, or a lawsuit.  Sadly, this is often the case when assets are distributed to beneficiaries via a Will.  A Trust allows the maker to safeguard an inheritance from the reach of the beneficiaries’ creditors by keeping the assets out of the name of the beneficiary.  Ownership of the assets remains in the Trust.  The beneficiary will have access to the assets in accordance with the directions you leave in your Trust. You may also allow your beneficiary to serve as Trustee, allowing the beneficiary to manage her own inheritance.  By leaving assets to your beneficiaries via a Trust rather than outright via your Will, you can ensure that the assets you worked so hard for will be available to your children and future generations.
  1. A Trust can Protect Governmental Benefits for a Person with Disabilities – a Will cannot. If you have a child, grandchild or other beneficiary with disabilities, then a Trust is a must.  If you leave assets to a person who receives needs-based governmental benefits via your Will, it will place your beneficiary in the difficult position of either losing those benefits, or transferring the inheritance into a Trust of which the state must be the beneficiary at the beneficiary’s death.  Unless the inheritance you are leaving is so significant that the monetary and medical benefits available to the person through programs such as Social Security and Medicaid are no longer important, then making sure that those governmental benefits continue to be available is vital.  Leaving assets to a person with disabilities via a Trust is the best way to ensure those governmental benefits are preserved and that the inheritance you leave will be available to pay for expenses that are not covered by these governmental benefits, which while vital to many, are limited in their scope.
  1. Trusts can Reduce Estate Taxes – a Traditional Will cannot. Many married couples have so-called “I-love-you” Wills, which leave all assets outright to the surviving spouse upon the first death.  If you have an estate of more than $1,000,000, then using “I-love-you” Wills means that money you think you are leaving to your beneficiaries will in fact be going to the Commonwealth of Massachusetts in the form of estate tax payable at the surviving spouse’s death.  If you would prefer that your assets pass to your family, create Trusts to reduce estate taxes.  Estate tax planning via Trusts for married couples is standard planning and permissible under both state and federal tax laws.
  1. A Trust can Administer Assets for Minor Beneficiaries without Court Intervention – a Will cannot. Leaving money directly to a minor creates an administrative nightmare because the law provides that a minor does not have the legal capacity to receive assets. The parent of the minor also does not have the ability to act as the child’s legal representative until the court says so.  As such, if you die with a Will that leaves money to minor beneficiaries, the court will need to appoint a Conservator to receive that inheritance for your children.  The Conservator will be required to report annually to the court and the court will appoint an overseer (guardian ad litem) to make sure the Conservator is doing his or her job for your minor beneficiaries.  This means huge costs and long delays in administering funds for minors.  It also means that when the minor turns 18, he or she will be entitled to receive all of those assets and will be free to do with them as he or she wishes (think fast cars, spring break, and lots of shopping).  Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary can use the assets only for purposes you decide are important and/or at ages that you dictate.

These are just five ways in which a Trust is superior to a Will.  If you want to know more about whether a Trust is right for your situation, contact an experienced estate planning attorney to discuss your goals.

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. 

May 2017

© 2017 Samuel, Sayward & Baler LLC

Five Ways to Make Sure Health Care Wishes are Carried Out

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Maria_144pxEstate planning attorneys have the opportunity to speak to people at all stages of life. Some of the most profound conversations we have are with clients who have serious illnesses or are close to death.  They often have great clarity about life and what is important.  Many of them also have definite thoughts about how they wish to be cared for at the end of their lives, and care deeply that their wishes are heard and carried out.

We all have the right to make our wishes known about the type of end-of-life care we want. Making your wishes known while you are well is important as an accident or an unexpected illness may cause you to lose the ability to express your care preferences. This April marks the 10th anniversary of National Healthcare Decisions Day. Here are five ways you can ensure your care preferences are clearly documented and honored:

  1. Create a Health Care Proxy. If you are over the age of 18, make sure you have signed a Health Care Proxy that designates a person you choose (your Health Care Agent) to make health care decisions for you if you become unable to make or communicate your own health care decisions.  Give your doctor and your Health Care Agent a copy of your Proxy. Then, have a conversation with your Health Care Agent about your feelings about health care and the type of care you would want in certain situations.  See No. 5 below for some resources to get you started.  If you are hospitalized, remember to bring your Health Care Proxy with you to the hospital. This will ensure you are not asked to sign another Proxy that will revoke the Proxy you currently have in place and that may not be as comprehensive.
  1. Assemble a Care Committee. For those who have very definite ideas about where and how they wish to be cared for, consider assembling a Care Committee to ensure your care wishes will be carried out, particularly if you have a chronic illness.  This group may consist of your Health Care Agent, a professional care manager, your attorney, your physician, the person you have named to make financial decisions for you if you are incapacitated, and perhaps your financial advisor.  Choose the participants, have discussions with them about your care preferences, and develop a plan that is financially realistic. Have a discussion with your Care Committee periodically to modify the plan as your needs and wishes change.  Think of your Care Committee as a team that can help your Health Care Agent carry out your wishes as necessary.
  1. Sign a Living Will. There are many advance directives that can be used by clients to express care preferences. A Living Will typically expresses a general preference that no extraordinary measures be used at the end of life.  In Massachusetts, Living Wills are not legally binding, and your physicians will not act based upon your Living Will (only at the direction of your Health Care Agent).  However, a Living Will can serve as evidence of your wishes that will guide your Health Care Agent in making decisions about end-of-life care.
  1. Advance Medical Directives. A Medical Directive can be used to express care preferences in specific medical situations.   Do Not Resuscitate or Do Not Intubate orders are medical orders that a doctor will put in place at a patient or Health Care Agent’s direction in appropriate circumstances.  In Massachusetts, a MOLST (Medical Orders for Life Sustaining Treatment) form is a useful document created by patient and doctor together that includes medical orders for care preferences, including resuscitation, ventilation, intubation, dialysis, artificial nutrition and hydration, and whether or not you should be transferred to a hospital.  This initiative is known as POLST (Physician Orders for Life Sustaining Treatment) on a national level.
  1. Use the Available Tools. There are many Massachusetts and national organizations working to increase awareness of the value of advance care planning and to encourage people to express their care preferences.  The Massachusetts Coalition for Serious Illness Care and related organizations have designated April as Massachusetts Healthcare Decisions Month, and has tools and resources on its website. Honoring Choices is another Massachusetts organization bringing information about health care decision-making and outreach to many local communities, as well as helping people to create a Health Care Proxy and express their health care preferences.  The Conversation Project  is dedicated to making it easier for people to talk about their wishes for end-of-life care.  Both Honoring Choices and The Conversation Project have starter kits on their websites that make it easy to get started.

As part of Healthcare Decisions Month, several Boston-area organizations will also be hosting Before I Die,  a global public art project that invites people to share their personal aspirations in public, reflect on what’s most important to them in life and how they contemplate death.  Use whatever tool or inspiration works for you, and find a way to express your wishes about end-of-life care to the people who will make those decisions for you.

April 2017

© 2017 Samuel, Sayward & Baler LLC

Your Real Estate and Owner’s Title Insurance

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Abby_144pxThe most valuable asset many clients own is their primary residence and/or vacation home. One “tool” in the estate planner’s toolbox to effectively avoid the time-consuming and expensive probate process at an owner’s death is to transfer or “convey” real estate into a Trust. However, such a conveyance should be completed with caution to ensure that you are protected in the event a problem with the property’s title is encountered in the future.

One form of protection is title insurance. Title insurance provides coverage in the event title defects, such as a fraudulent conveyance or an unknown easement or lien, are discovered after you have purchased your property.  These title defects typically come to light when you are in the process of selling or refinancing the property.  If you obtained a mortgage when you purchased your property, it is likely that “lender’s title insurance” was purchased at the time on behalf of the mortgage company.  As the buyer of the property you had the option to purchase “owner’s title insurance.”  Owner’s title insurance is purchased by paying a one-time premium as part of the closing costs.  If purchased, you should have received an owner’s title insurance policy.  The purpose of title insurance is to provide you, as opposed to the mortgage company, with financial coverage if title defects are later discovered.

Some detective work on your part may be necessary to determine if: (1) you obtained owner’s title insurance when you purchased your property, and (2) if your coverage will continue after the property is conveyed into Trust, depending on the terms of the policy.

If you have an owner’s title insurance policy, the company should be contacted to confirm in writing that coverage will continue upon conveyance.  If coverage will not continue under the terms of the policy, an endorsement (or amendment) to the policy should be obtained that will add the Trust to which the property is being conveyed as an additional “insured” on the title policy, thereby continuing the title insurance coverage after the conveyance. Title insurance companies sometimes charge fees of $100-$300 to issue an endorsement to the policy.

Be sure to take the time to determine if you have owner’s title insurance, and if your coverage will continue prior to conveying your property into Trust – it will be well worth the time and effort involved. Ensuring your coverage will not be inadvertently terminated will save you, the Trustee of your Trust, or the Personal Representative of your estate significant aggravation and expense when the property is sold in the future in the event a title defect is discovered.

March 2017

© 2017 Samuel, Sayward & Baler LLC

Five Facts to Know about Life Estates

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Sue_144pxUsing a life estate deed as a way to protect real estate from long-term care costs has been a common planning technique for decades.  A life estate deed typically works like this:  parents sign a deed transferring their home to their children for nominal consideration (i.e. $1.00).  The deed includes a provision stating that the parents “retain the right to use and occupy the property during their lifetimes,” a so-called “life estate” in the property. Upon the death of the parents, the life estate ceases to exist and the children own the property free and clear of any lien for long-term care costs.

There are some downsides to using a life estate deed which can be eliminated if the parent conveys the property to an irrevocable trust.  This has made irrevocable trust planning very popular in the last several years.  However, the recent attacks on the use of irrevocable trusts by MassHealth, the agency that administers the Medicaid program in Massachusetts, have caused elder law attorneys to revisit the use of the simple life estate deed.

Here are five consequences to be aware of when considering the transfer of your real estate with a retained life estate.

  1. Five-year ineligibility period: The transfer is a gift under the Medicaid (MassHealth) rules and the parents will be ineligible for Medicaid benefits to pay for their long-term nursing home care costs for five years following the transfer.  Under the current Medicaid rules, once the five-year ineligibility period has passed, the parents would be eligible for Medicaid benefits to pay for the cost of their care, assuming they otherwise meet the eligibility criteria.
  1. The property will be subject to a lien for the life estate Medicaid benefits. It is important to understand that if the parent receives Medicaid benefits, whether in a nursing home or in the community, the Commonwealth will place a lien against the parent’s property.  However, if the parent owns a life estate in the property, the Medicaid rules prevent the state from forcing the parent/life estate holder to sell the property during the parent’s lifetime.  Upon the death of a Medicaid beneficiary, the state can collect the amount it paid out on behalf of the person from his probate estate.  A person’s probate estate consists of assets in his individual name.  Because the retained life estate disappears upon the death of the parent, it is not a probate asset and therefore the state cannot enforce its lien against the property under current law. It is important to understand that if the property is sold during the parent’s lifetime, the lien will have to be satisfied from the parent’s share of the sale proceeds.
  1. Children’s creditors. If you transfer your home to your children, they will be the owners of the property even if you retain a life estate. That means your children’s creditors may be able to place a lien against your home for your children’s debts.  However, when the parents have retained a life estate, the creditors of a child cannot force the sale of the property to satisfy a child’s debt.  That is because a child’s creditors are not in any better position than the child.  Since the child could not sell the property and force the parents out of the property, neither could a child’s creditor.  The creditor will have to wait to enforce its claim until after the parents die.  Having said that, parents need to know that a recent bankruptcy case resulted in the court ordering the sale of property owned by the debtor child, in which the still-living parent had a life estate.  When the house was sold, the father received his share of the proceeds.  However, since the value of a life estate is calculated based on the life expectancy of the life estate holder at the time of the sale, the value of the parent’s life estate decreases with every birthday.  The end result of this case was that dad received a little bit of money when the house was sold, but had no place to live.
  1. Stepped up basis/estate tax inclusion. A big advantage of retaining a life estate in property that is transferred:  The full value of the property is taxable in the estate of the life estate holder at death for estate tax purposes.  While it may seem counterintuitive to want assets to be included in the taxable estate, for Massachusetts estates valued at $1 million or less, this is actually a benefit.  Under current law, assets that are included in a taxable estate receive a “stepped-up” basis at the owner’s death equal to the fair market value of the asset.  For example, if I bought my house for $50,000 many years ago and it is now worth $300,000, upon the sale of the house during my lifetime there would be capital gain of $250,000 ($300,000 – $50,000).  I would not have to pay any capital gain tax because there is a rule in the tax law that allows a person who has owned and occupied a home for two out of the five years preceding the sale to exclude $250,000 of capital gain on the sale.  If I gave my house to my children outright, without retaining a life estate, when my children sell the property they will be have to pay capital gain tax on $250,000 because the home is not their primary residence.  But, if I retain a life estate in my home when I transfer it to my children, my house will be included in my taxable estate at my death and my children’s tax basis in the property will be the then current fair market value of the property.  So if the property is worth $300,000 at my death, and my children sell it for $300,000, there will not be any gain, so no tax will be due.  In this example, that means about $50,000 of tax savings.
  1. Capital gain exclusion on sale of primary residence. As a general rule, you should not transfer your home to your children if you are planning on selling the property.  However, times change and sometimes property that was transferred to children needs to be sold during the parents’ lifetimes.  It is important to understand that if this happens, there may be capital gain tax on the sale that would have been avoided if no transfer of the property to the children had been made.  That is because the tax laws permit an individual to exclude up to $250,000 of capital gain on the sale of her primary residence, provided she has owned and occupied the property for two out of the five years preceding the sale.  For a married couple, the exclusion is $500,000.  However, if your children own an interest in your home and if they do not occupy the home as their principal residence, they will not be able to exclude the gain on their portion of the sale.

Another consequence to be aware of is that if the property is sold during the parent’s lifetime, the parent will be entitled to some (not all) of the proceeds.  This is not necessarily a bad result, but if the parent is in a nursing home or about to go into a nursing home when the property is sold, a portion of the sale proceeds will be countable assets of the parent.  The value of the parent’s life estate interest is calculated based on the age of the life estate holder and an interest rate mandated by the IRS.   For example, in March 2017 the current value of a life estate held by a parent who is 80 years old is about 17.4% of the value of the property.  If the property is sold for $400,000, the parent will receive 17.4% of the proceeds, or $69,600.  If the parent is residing in a nursing home with Medicaid paying for the cost of care, then the receipt of $69,600 from the sale of his former home will cause him to become ineligible for Medicaid until those proceeds are spent down.

While transferring property with a retained life estate can be an excellent long-term care planning tool, there are significant consequences that property owners should understand before undertaking this planning.  If you are wondering whether this type of planning would be good for your family, consult with an experienced elder law attorney to make sure you do not end up facing one or more unexpected outcomes.

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. 

March 2017

© 2017 Samuel, Sayward & Baler LLC

SSB Partners with Honoring Choices

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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

© 2017 Samuel, Sayward & Baler LLC

We Get Around

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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

© 2017 Samuel, Sayward & Baler LLC

Employer Sponsored Retirement Plans: What You Need to Know

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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.  

Wills • Trusts • Elder Law • Long-Term Care Planning • Estates

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