Estate Planning

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

© 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

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

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