Estate Planning

Green Burials and Estate Planning

June 8, 2022 by Debbie Hayes

Attorney Megan Bartholomew discusses Green Burials for our Smart Counsel for Lunch Series. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.

Five U.S. Supreme Court Decisions that Impacted Estate Planning

June 1, 2022 by SSB

Last month’s leak of a draft U.S. Supreme Court opinion that would overturn the constitutional right to abortion in most circumstances has led to the Court dominating the news yet again and serves as a reminder of the far-reaching consequences of the Supreme Court’s decisions. Although the handful of decisions on hot-button issues released by the Court every June frequently dominate the headlines and the public’s conception of what the Court does, it is important to remember that the Supreme Court also hands down numerous “under-the-radar” decisions that have far-reaching impacts on all areas of the law, including estate planning and elder law. As the month of June begins and the Court prepares to wrap up another term, We thought now would be a good time to showcase five Supreme Court decisions that have impacted estate planning and elder law.

Nichols v. Eaton (1875): Considered by some legal scholars to be the most important trusts and estates opinion ever produced by the Supreme Court, it could be argued that this decision laid the foundation for modern estate planning. Decided nearly 150 years ago, this case validates the use of “spendthrift clauses” in trusts. A spendthrift clause prohibits the beneficiary(ies) of a trust from transferring their interest(s) in the trust to a third party, either voluntarily or involuntarily. While this prevents, e.g., an impatient beneficiary from selling their income interest in a trust in exchange for a lump sum, far more consequentially, it also prevents potential creditors (including those with valid claims) from accessing a beneficiary’s interest in the trust. This means that, so long as a beneficiary’s interest stays in the trust, their creditors will not be able to access it or benefit from it. In the wake of this decision, spendthrift clauses have become ubiquitous in modern estate plans, to the point that it is rare to see a modern trust that doesn’t contain a spendthrift clause. It is the validity and enforceability of spendthrift clauses that makes the use of lifetime continuing trusts increasingly popular and common in modern estate plans.
United States v. Windsor (2013): It is a happy coincidence that the Supreme Court’s tradition of releasing opinions on hot-button issues in June has meant that several monumental decisions affecting LGBTQ rights have been issued during Pride Month, giving members of the LGBTQ community added reason to celebrate each June. Among those decisions was United States v. Windsor, which struck down the Defense of Marriage Act nearly a decade ago. Signed into law in 1996, among other things the Act defined “marriage” as between one man and one woman for purposes of federal law, meaning that even if a same-sex couple was legally married under the laws of their state, that marriage was not recognized by the federal government. As a result, married same-sex couples were unable to, e.g., file joint income tax returns, apply for survivor’s Social Security benefits upon the death of a spouse, take advantage of the more favorable asset limits for married couples applying for Medicaid long-term care benefits, or take advantage of the unlimited marital deduction for federal gift and estate taxes. This frequently resulted in estate and long-term care planning for same-sex married couples being more complicated and costly while still not always achieving the same outcomes that were possible for opposite-sex married couples. Fortunately, the Windsor decision more or less leveled the playing field for same-sex married couples, and recent actions by lower federal courts have attempted to remedy some of the wrongs suffered by same-sex married couples while the Act was in effect.
Clark v. Rameker (2014): This case deals with creditor protections for tax-qualified retirement assets (e.g., 401(k)s, IRAs, etc.). While federal law has long protected these assets from the reach of creditors in bankruptcy proceedings, this case dealt with whether this protection extends beyond the original contributor to the plan to also cover beneficiaries who inherited these assets. The Supreme Court ultimately held that the creditor protection only applies to the original contributor and their surviving spouse, and not to inherited beneficiaries, ultimately changing the calculus for estate planners in terms of whether to name a trust or an individual as the beneficiary of such assets. By naming a lifetime continuing trust with a valid spendthrift clause as the beneficiary of these assets as opposed to an individual, it is possible to maintain creditor protection for these assets.
Sveen v. Melin (2018): While it is undoubtedly best practice to update beneficiary designations after a divorce, for a variety of reasons this doesn’t always happen. As a result, many states, including Massachusetts, have enacted “revocation-upon-divorce” laws, which automatically revoke the designation of an ex-spouse as the beneficiary of, e.g., a life insurance policy. In 2018, the Supreme Court was asked to decide whether the Constitution permitted these laws to apply retroactively to beneficiary designations made prior to their enactment. While the Court ultimately held that these laws can apply retroactively, the protracted litigation in this case nonetheless highlights the importance of making sure to update your estate plan, including beneficiary designations, in the wake of major life changes such as divorce.
North Carolina v. Kimberley Rice Kaestner 1992 Family Trust (2019): In the modern era, it is more common than ever for families to wind up spread out across the country. Gone are the days where multiple generations of a family can be counted on to live in the same town or even the same state. This makes it more likely that a trust will be created in one state, have a trustee in a different state, and have beneficiaries in one or more additional states. With the only constants in life being death and taxes, it is not surprising that all of these states might want to impose taxes on this one trust. Fortunately, the Supreme Court has taken notice of this and begun to establish guidelines for when states are constitutionally permitted to tax a trust. In 2019, the Court held that the mere fact that a discretionary beneficiary of a trust (i.e., a beneficiary who had no right to demand or force distributions from the trust) lives in a state is not sufficient to give that state the authority to tax the trust. Although this decision was fairly fact-specific, it nonetheless has provided some guidance to estate planners on the tax consequences of trusts that touch multiple states.

With the exception of the Windsor case, which was hotly contested and decided on a 5-4 basis with three rather vociferous dissenting opinions, none of the Supreme Court cases mentioned here were particularly controversial or headline-grabbing. In fact, most dealt with fairly technical issues of interpretation. Nonetheless, they should all serve as reminders that even “boring” decisions by the Supreme Court can have a far-reaching impact on the law.

June 2022

Five Reasons to Consider a Prenuptial Agreement

April 6, 2022 by Attorney Maria Baler

Five Reasons to Consider a Prenuptial Agreement

By Attorney Maria C. Baler

As Alfred Lord Tennyson said in his poem Locksley Hall: “In the spring a young man’s fancy lightly turns to thoughts of love”…and an estate planner’s thoughts turn to pre-nuptial agreements. With spring comes the start of wedding season. Although estate planners are romantics at heart, they also know that not all couples live happily ever after.

A prenuptial, or premarital, agreement is a contract between two people who are planning to marry, by which they agree in advance to a division of their assets in the event of divorce or death. Although some skeptics think that pre-nuptial agreements are only for the wealthy, here are five reasons you might want to consider a pre-nuptial agreement if you are headed to the altar.

Protect Inherited Assets

In dividing a married couple’s property in the event of divorce, all property the couple has brought to the marriage or acquires during the marriage is considered, including any assets a member of the couple may have inherited during the marriage. Massachusetts, like some other states, also allows a judge to consider the opportunity of each party to acquire assets and income in the future, including any inheritance a party may receive in the future. A prenuptial agreement is probably the easiest and best way to protect inherited assets from being considered when dividing assets between divorcing spouses. The agreement can provide that any assets a party inherits during the marriage or may inherit in the future should not be considered during property division in the event of the couple’s divorce. For many couples (and their parents), a prenuptial agreement that is narrowly tailored to protect inherited assets may provide peace of mind that family wealth will not be at risk if the marriage does not work out.

Protect a Family Business

If an owner or a member of a family business is getting married, this often (or should) raise concern about what will happen to that person’s ownership interest in the family business in the event of a divorce. Will a judge award an interest in the business to the ex-spouse? What will that mean to the family’s ability to continue to operate the business or make business decisions if the ex-spouse has a say in how the business is run? This can be a messy situation, and one which a prenuptial agreement can address. The parties can agree in advance that the party with the ownership interest in the business will keep that interest in the event of a divorce. This will go a long way to providing security for the other business owners and ensure the business can carry on without interference, regardless of how long the marriage lasts.

Protect Children from a Prior Marriage

Prenuptial agreements are not just for first marriages, and in fact may be even more important for those who have been married before, and who may have more assets to protect and perhaps even children from a prior relationship. Marriage confers certain rights on your spouse under the law, including the right not to be disinherited at death. However, a prenuptial agreement can waive those rights, if appropriate. For example, if two people who have children from prior relationships decide to marry, they may enter into a pre-nuptial agreement that prevents the new spouse from claiming any interest in the estate of the deceased spouse, so that the deceased spouse is assured that his or her assets can be left to their children at their death, without the threat of interference from the surviving spouse. This can be especially important if the children of the deceased spouse are minors, and may need those assets for their support and education. It can be equally important for older children who may be nervous about their potential inheritance being disrupted by a parent’s new spouse. A pre-nuptial agreement will not prevent the couple from leaving assets to each other at death if they wish, but will prevent the surviving member of the couple from disrupting the deceased’s estate plan after the fact.

Address Long-term Care Concerns

A pre-nuptial agreement can make it clear, especially for couples who marry later in life, that each member of the couple is responsible to pay for their own care costs, including any long-term care expenses, rather than their new spouse bearing any responsibility for those expenses. Often, couples will consider purchasing long-term care insurance to insure against the possibility that care costs will reduce the assets they may otherwise be able to leave to their children. Keep in mind that if qualification for public benefits, such as Medicaid benefits, is necessary, a prenuptial agreement’s provisions will not be honored, and Medicaid will consider the assets of both spouses in determining eligibility for benefits. However, if the marriage is terminated (and in some circumstances, divorce is a long-term care planning choice), the pre-nuptial agreement may prevent the Court from allocating assets in conflict with the agreement.

Protect Special Assets

Perhaps one spouse has a home they painstakingly restored prior to the marriage. In the event of a divorce, that spouse may want to be sure they are able to keep the house, rather than having it go to their spouse or sold so that the value can be divided between them. Maybe the other party has a partial ownership interest in a ski condo, or a valuable antique car. A prenuptial agreement can address these special assets, and allow the parties to agree in advance how those assets would be treated and divided in the event of a divorce.

Whatever the motivation for creating a prenuptial agreement, the agreement must be created in a way that will ensure it will be enforceable if the parties divorce. Massachusetts courts have established very clear parameters that must be followed for a premarital agreement to be enforceable if, and when, the time comes for the agreement to do what it was created to do – protect assets. First, when creating and negotiating a prenuptial agreement, it is mandatory that both parties have their own attorneys to ensure each party understands how the terms of the agreement benefit and obligate them. Second, in order to be enforceable, Massachusetts courts have held that a prenuptial agreement must be fair both at the time the agreement is signed and at the time it is sought to be enforced. Third, each party to a prenuptial agreement must fully disclose his or her assets, including anticipated inheritances, to the other party. Full and complete disclosure of assets is essential to the agreement’s enforceability. Finally, prenuptial agreements must be entered into freely by each party, without coercion or influence from the other party or outside influences. For this reason, courts have found that the agreement must be entered into far enough in advance of the wedding that neither party feels coerced into signing.

Consider a prenuptial agreement if your assets or circumstances are such that you want added assurance that no matter how matters of the heart may go, your assets and your children will be protected.

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), and the immediate past President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. 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.

April, 2022

Five Reminders of Things to Do this Groundhog Day

February 2, 2022 by Attorney Maria Baler

By the time you read this it will likely be Groundhog Day, February 2nd, the day each year when a groundhog named Punxsutawney Phil emerges from his burrow in western Pennsylvania and determines, with questionable accuracy, whether we are in for another six weeks of winter. After last weekend’s blizzard, I think it’s safe to say we are all rooting for winter to be over as quickly as possible!
Many of you may also remember the 1993 movie Groundhog Day starring Bill Murray as a TV weatherman who relives the same day over and over as he goes on location to cover Punxsutawney Phil, and famously says: “Well, what if there is no tomorrow? There wasn’t one today.” In honor of Groundhog Day and in the spirit of the movie, I thought I would remind you of five things we talk about over and over and over again when helping our clients plan for the day when there is no tomorrow.

1. Create or Update your Estate Plan

An estate plan is your opportunity to create a roadmap for what happens to you and your assets if you become incapacitated or pass away. It is your chance to decide who makes legal, financial and health care decisions for you if you are sick, who will be in charge of settling your affairs and distributing your assets after your death, and how those assets will be distributed. Estate plans can be simple or complex. They can be designed to save taxes, avoid the involvement of the probate court, create a structure to manage an inheritance for a beneficiary who is young or foolish or both. Whatever your goals, create an estate plan, or update yours if it has been a few years since you did it. Life goes on, things change. As we say to our clients, it’s never too late to plan as long as you are alive and well, until you aren’t.

2. Fund your Trust

If you have created a Trust as part of your estate plan, you have heard us say many times that funding your Trust is one of the most important tasks that you need to do to ensure your plan works as intended. This means re-titling assets so that they are owned by the Trust, and not by you individually, or designating your Trust as the beneficiary of certain assets so that they will pay to the Trust at your death. Funding a Trust ensures the assets owned by the trust will avoid probate at your death. Funding a Trust can also ensure assets will be sheltered from estate tax at the death of the first spouse of a married couple, savings tens of thousands of dollars in taxes for your children or other heirs. Funding a Trust may also allow someone to manage and use those assets for you if you become incapacitated. So, if you have a Trust, don’t forget to fund it, and don’t delay in doing so.

3. Compile Important Information

If you become incapacitated or pass away, there is a lot of important information that your loved ones will need to know – What assets do you own and where are they located? Who prepares your income taxes? Do you have life insurance? Where is your safe deposit box? Where did you hide your stash of gold coins? What is the password to your Shutterfly account? What is the significance of those old candlesticks that occupy a place of honor on your mantle? Consider sitting down and writing a list of things someone would need to know if you were not able to tell them, including a list of your assets, your advisors (legal, financial, tax), and where your estate plan documents are located. Tell someone you trust where to find this information if necessary. And lastly, keep that list updated so that it will be current when it is needed.

4. Name Financial and Health Care Decision-Makers

Much of the fun and games in your estate plan happens after your death – taxes are paid, assets are distributed, beneficiaries divvy up your tangible property and fight over the patio furniture. However, there are two important documents that will directly impact you while you are alive – your Power of Attorney which names a person who will make legal and financial decisions for you and your Health Care Proxy which names someone who will make health care decisions for you if you are not able to make decisions for yourself. Make sure you have control over who is making decisions for you by creating these documents while you are well, and naming people you trust will make good decisions for you. Taking control of the situation and choosing your decision-makers while you are still able to do so will allow you to make the best choice, will allow you to prepare those decision-makers by discussing your wishes with them. Doing so will avoid a situation where no one is named and a judge decides who will serve in these roles rather than you.

5. Name a Guardian for Minors

Parents of young children do not have a lot of free time, and often the last thing on their mind is writing a Will, since the thought of passing away is remote and very scary. However, as a young parent, writing a Will is one of the most important things you can do. A Will is the one opportunity you have to decide who will serve as your child’s guardian if you are not able to do so. A guardian is a person who will be appointed by the Court to have custody of your children, and to make decisions regarding where they live, where they go to school, and their health care. If one parent dies, a child’s surviving parent will be named as the child’s guardian unless that parent is unfit. However, if both of a child’s parents are deceased, an alternate guardian should be named.

Naming a guardian for your minor children is one of the most difficult decisions you will make, but is arguably the most important thing you can do to ensure your child’s well-being if you die before your child is an adult. There is no perfect choice for this role, and often parents need to compromise on their ideal choices. As your children grow and change, a different person may be more appropriate, and your Will can be changed to name a different guardian at a later date. Naming someone is better than naming no one. If you die without naming a guardian for your children, the Court will have to choose among the people who ask to be appointed. And chances are some of those people may not be the people you would have chosen if you had the choice. Unfortunately, without a Will, the Court has no idea who your choice would be.

Long winter weekends, especially when COVID-19 has limited many people’s activities, are a good time to cross things off the To Do List. Put some of the above items on your list and get them done. Here’s hoping you will be around to celebrate many more Groundhog Days to come and fingers crossed for an early spring!

Smart Counsel Webinar – Fraud Prevention in the 21st Century – What You Need to Know to Keep Your Information Safe

January 19, 2022 by Attorney Maria Baler

Join us for our next Smart Counsel webinar on Thursday, February 24th when Norfolk County District Attorney Michael Morrissey will share his expertise on fraud prevention, cyber hacking, scams and identity theft.

Attorney Maria Baler will join him and speak to the importance of having updated estate plan documents that permit trusted individuals to assist you if necessary, including the ability to access your digital assets.

In addition to hearing from both Norfolk County District Attorney Michael Morrissey and Attorney Maria Baler, attendees will have the opportunity to ask questions.

Join us virtually for this presentation on Thursday, February 24, 2022 from 6:00 pm to 7:30 pm.

Contact Victoria Ung at 781/461-1020 or ung@ssbllc.com to reserve a spot for you and a friend.

The program is free but registration is required.

Suzanne R. Sayward

Maria C. Baler

Abigail V. Poole

Francis R. Mulé

Megan L. Bartholomew

Congratulations to a Amazing Associate

December 15, 2021 by francisgabrielmcgovern@gmail.com

We know that our Associate Attorney Abigail Poole is a smart, thoughtful and caring person and an excellent attorney, but it is good to know that others have noticed that too and that she is being recognized for it!

We want to take this opportunity to congratulate Abby for the recognition she has received this year:

Abby has been chosen as Massachusetts Super Lawyers / Rising Star for 2021 in the area of Estate Planning. Rising Stars are attorneys under the age of 40 who have distinguished themselves in their practice area.
Abby has been named the Chapter Member of the Year by the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). Abby has been an active member of MassNAELA for many years, and currently serves as the Chapter’s Vice President, as the co-chair of the Membership Committee, as a member of the Special Needs Steering Committee. Abby is the President-Elect of MassNAELA for 2022, and will become the Chapter’s President in 2023.

We are proud of Abby, and happy that she is receiving the recognition she deserves as an up-and-coming leader and knowledgeable and experienced attorney in the areas of Estate Planning and Elder Law.

Congratulations!

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), and the current President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. 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, 2021

Make Your Attorney-in-Fact Your Superhero

December 7, 2021 by Attorney Abigail V. Poole

Five Things to Discuss with Your Aging Parents This Holiday Season

December 1, 2021 by SSB

Though it may be hard to believe, it is once again December, the time of year when the days grow shorter, the weather grows colder, and a variety of religious and secular holidays and traditions call on us to get together to celebrate with family and friends, many of whom we may only see once or twice a year. For those who live far from family, this time of year frequently involves traveling to see relatives in person, possibly for the first time in a long time in light of the fact that the COVID-19 pandemic meant that many of us had to scale back or even cancel our cherished celebrations last year.

Although it’s not always the easiest topic to discuss, this time of year can be a great opportunity to talk to your parents (and/or other close relatives) about ensuring that they have plans in place for what happens both after they die and in the event they become incapacitated during life. In particular, you should consider discussing:

1. Your Parents’ Comprehensive Estate Plan. Having a comprehensive, up-to-date estate plan in place is important both because it puts your parents in control of what happens after their deaths and during periods of incapacity and because, if properly structured, it avoids costly, intrusive, and time-consuming court proceedings.

A comprehensive estate plan consists of, at a minimum, Wills to dispose of your parents’ probate assets after death, durable powers of attorney to permit someone chosen by them to manage their financial affairs if they become incapacitated, health care proxies to permit someone chosen by them to make medical decisions on their behalf if they become incapacitated, and HIPAA release authorizations to permit your parents’ health care providers to disclose and discuss their protected medical information with those listed in the document. A comprehensive estate plan often also includes one or more revocable living trusts, which can allow the creator(s) of the trust(s) (the “Grantor(s)”) to avoid the probate process after death and streamline the management of assets during life. Properly structured revocable trusts can also, in the case of a married couple, minimize or even eliminate the estate taxes due upon the death of the surviving spouse.

If your parents do not have an up-to-date, comprehensive estate plan in place, you should encourage them to speak with an attorney who practices in the area of estate planning to set one up.

2. Your Parents’ Plans Regarding Long-Term Care. The seemingly ever-increasing cost of long-term care, not to mention the different options available, is often a source of significant stress and worry for people as they age. Generally speaking, there are three ways to pay for long-term care: (a) paying privately; (b) purchasing long-term care insurance to cover a portion of the costs; or (c) qualifying for needs-based government assistance through Medicaid, which has strict financial requirements. Each option has its own pros and cons, and not every option is available in every situation. Medicaid, for instance, will typically cover 24/7 long-term care in a nursing home and will often cover some amount of home care (though usually not 24/7 home care), but will only very rarely cover care at an assisted living facility.

If your parents are concerned about long-term care or would like to know more about their options, you should encourage them to speak with an experienced elder law attorney about these issues. It is important to understand the different long-term care options as well as what advance planning strategies are available and appropriate.

3. Your Parents’ Wishes Regarding End-of-Life Medical Care. Modern medicine is rather miraculous in its ability to keep people alive longer and longer, but these advances mean that it is more important than ever to think ahead about what types of measures you would want to be taken to prolong your life if you are, for instance, terminally ill. In Massachusetts, there are two primary documents that can be used to express these wishes. The first is a living will, which is not legally binding and is usually a general statement of intent regarding end-of-life care (e.g., “Do everything you can to keep me alive as long as possible,” or “Do not use “extraordinary” methods such as a feeding tube to extend my life.”). Although this document can often be prepared as part of a comprehensive estate plan, since it is not legally binding, it can also be prepared by the individual without the involvement of a legal professional.

The second document is a Medical Order for Life-Sustaining Treatment (commonly abbreviated as a “MOLST”). Unlike the other documents discussed in this article, this document is prepared in consultation with a physician and, once signed, becomes a medical order regarding certain types of end-of-life care which is placed in the patient’s medical record. Although MOLSTs have traditionally only been used with patients who are terminally ill and/or have a severe chronic illness, some physicians have started discussing them with a wider array of patients.

4. Your Parents’ Wishes Regarding Funeral Services and the Disposal of Their Remains. A crucial task that generally falls to children after the death of a parent but is rarely talked about in an estate planning context is the disposal of the parent’s remains and the planning of their funeral. These decisions generally need to be made very quickly after death, at a time when family members may still be in shock and/or not thinking clearly. This makes it especially important to discuss your parents’ wishes ahead of time rather than trying to guess at what they would want after they’re gone, when you could be vulnerable to exploitation. While traditionally funerals have been relatively somber affairs and the options for the disposal of bodily remains were limited to a traditional burial or cremation, newer options, such as green/environmentally friendly burials and memorial services that are more celebratory as opposed to mournful, are becoming more common and widely available.

If your parents have particularly strong wishes about the disposal of their remains and/or their funeral services, they may want to consider adding a Directive as to Remains to their estate plan. This highly customizable document can express wishes regarding the actual disposal of bodily remains (e.g., burial or cremation) as well as wishes about funeral and other memorial services, including whether certain religious services or rites should be performed and whether any sort of service should be held at all.

5. Your Comprehensive Estate Plan and Wishes. While most of this article has focused on what you should discuss with your parents about their wishes and plans, you should also take the opportunity to discuss what your wishes and plans are for yourself. This is especially true if your parents are named in your own estate plan documents, either as beneficiaries or to serve in one or more key roles. As important as it is for you to know your parents’ wishes should something happen to them, it is equally important for your parents to know your wishes should something happen to you. Additionally, taking the opportunity to lead by example may give reluctant parents the push they need to get their own plans in order.

These topics do not qualify as light holiday dinner conversation, and are often difficult, awkward, and/or painful to discuss. Unfortunately, while not discussing it may save you from some difficult, painful moments now, it may be even more painful if these discussions are put off when there’s been an emergency and decisions need to be made quickly either with no plan in place or with a plan that no one knew about beforehand. That said, this is not a discussion that should be rushed into or done haphazardly. Fortunately, groups such as The Conversation Project and the broad “death positivity” movement have resources available online to help families approach these subjects thoughtfully and productively.

December 2021

Five Situations Where an Estate Is Ripe for Catastrophe

November 2, 2021 by Attorney Abigail V. Poole

“Handling my father’s estate after his death was a nightmare – I don’t want to leave the same kind of mess for my children.” This is a comment I regularly hear from clients who are meeting with me to create their own estate plan because they want to make it as easy and painless as possible for their family to settle their estates after they pass away. The good news is that there are steps you can take now to ensure the administration of your estate goes smoothly. Here are five situations where difficulties commonly arise during the administration of an estate, and what you can do now so that your children aren’t saying the same thing after your death.

1. Unclear Tangible Personal Property Distribution Wishes

Surprisingly, or perhaps not so surprisingly, tangible personal property distribution can prolong the administration of an estate. Tangible personal property consists of your personal items – for example, vehicles, clothing, furniture, art work, collectibles, and jewelry. I regularly assist Personal Representatives who encounter conflict among beneficiaries (recipients of estate assets) over the distribution of tangible personal property because of its sentimental value.

One way to reduce potential conflict over the distribution of tangible personal property is to create an itemized list of your important tangible personal property and the beneficiaries to whom you wish those items to be distributed. Another way is to give away the items while you are alive and able to do so.

2. Out-of-Date Estate Plans

Your financial assets, goals and who you designate to manage your estate when you are 35 years old is likely to be different when you are 50 years old and then again when you are 70. If you appointed a family member, friend or professional as your Personal Representative or Trustee who has since died or become incapacitated, it may be difficult to find someone else willing to take on the responsibilities of administering your estate. Additionally, the beneficiaries to whom you wish to distribute your estate after your death may be very different. Perhaps your adult children are now financially well-off and you want only your grandchildren to benefit from your estate assets. Or perhaps you intended a certain asset, such as a house, to be distributed to one of your adult children but you are now estranged from that child and prefer your house to be distributed to another.

A good rule of thumb is that you should review your estate plan to ensure it has the appropriate people designated to administer your estate and receive your estate assets whenever the relationship, health or financial circumstances of you and/or your beneficiaries change, or about every five (5) years.

3. Blended Families with Adult Children

One specific situation that is ripe for conflict is a blended family. Oftentimes the spouses of a second or third marriage bring with them significant assets and adult children who may expect to inherit their parent’s assets soon after their parent’s death. You may unintentionally create strife between your surviving spouse and your adult children by giving your assets to your surviving spouse who uses them to pay for significant health care expenses and leaves nothing for your adult children. Or, your adult children may have poor interpersonal relationships, known or unknown to you, which may have a negative impact on the administration of your estate if an adult child is selected to be Personal Representative or Trustee.

You can reduce the likelihood of conflict among your children and surviving spouse after your death with a prenuptial agreement and estate plan. You can enter into a prenuptial agreement that outlines what happens to your assets at your death as well as divorce. The prenuptial agreement informs and works hand-in-hand with your estate plan documents. Some couples create an estate plan together with the same estate planning attorney and others prefer to retain separate estate planning attorneys.

4. A Voluminous Number of (Forgotten) Assets

Take a moment to think about all of your assets. Do you have any old bank accounts in another state? Or stock certificates or savings bonds tucked away somewhere? What about one or more life insurance policies stashed in a safe deposit box only you can access? How about an ownership interest in real estate in another state with another family member? The more assets you have, the more time-consuming and complicated the administration of your estate will be.

To make things easier on your Personal Representative or Trustee after your death, there are a few things you can do now. Carefully consider if you need to have multiple savings accounts or if you can consolidate them. Periodically check the unclaimed property divisions of states in which you have resided for stock dividends or forgotten bank account balances and file a claim to obtain the property. Create a list of all your assets, update it regularly and let a trusted family member or friend (and your estate planning attorney!) know where to find the information in case something happens to you.

5. Do Nothing

A guaranteed, surefire way to make the administration of your estate difficult is to do absolutely nothing. It may result in forgotten assets appearing later which will require a late and limited probate proceeding. Doing nothing could lead to your estate assets passing to distant relatives, if any, or to the Commonwealth of Massachusetts. Doing nothing may cause a public administrator to be appointed to administer your estate in a way you did not intend.

Do something. If you are reading this article, you have already taken an important first step to learn more. Now take the next step and meet with an experienced estate planning attorney to create or update your estate plan.

A knowledgeable estate planning attorney will guide you through the steps necessary to avoid leaving a mess for your family to deal with after your death. From advising you to designate the appropriate beneficiaries of your retirement accounts to creating an estate plan for your blended family to periodically getting in touch with you to remind you to review and update your estate plan, the attorneys at Samuel, Sayward & Baler LLC are here to assist you so that the next generation will visit their attorney and say, “my father had his estate plan in place and made it easy for us to administer – I want to do the same for my children.”

Attorney Abigail V. Poole is an associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is an active member and Vice President of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.

November, 2021

Estate Planning and Life Insurance – 5 Ways they Work Together

August 31, 2021 by Attorney Suzanne Sayward

Although we do not sell life insurance here at Samuel, Sayward & Baler LLC, we do help clients plan for their families’ future and life insurance is often a part of that planning. Here are five things to consider in the context of your estate plan when thinking about purchasing, or dropping, a life insurance policy.

1. Life insurance is an excellent planning tool for young families. Young couples just starting life together often do not have a lot of assets. They are at the beginning of their careers so their earnings are not at their peak. In addition, they may carry significant student loan debt or a large mortgage. The birth of a child is often the event that motivates them to purchase life insurance so that if one of them passes away, the survivor will have sufficient funds to stay in the house and raise the children. Considerations such as the impact the loss of one spouse’s income will have on the ability to pay the bills and educate the children should be analyzed when determining whether and how much life insurance to purchase.
2. Life insurance is taxable in the insured’s estate (often). Many people are confused about the taxability of life insurance. In most cases, life insurance proceeds are not taxable income to the person who receives them. For example, if my aunt names me as the beneficiary of her $100,000 life insurance policy, that $100,000 is not taxable income to me. However, life insurance proceeds are a taxable asset of the insured’s estate if the insured owned the policy or had the right to cancel, surrender, or assign the policy or change the policy’s beneficiary. As such, although I will not pay income tax on the $100,000 of life insurance proceeds my aunt left me, those proceeds will be included in my aunt’s taxable estate and will increase the estate tax liability if my aunt’s estate is large enough to require the payment of federal or state estate tax.
3. Life insurance can be an easy way to solve a hard problem. Life insurance can be a good way to address a situation that is creating stress in planning. For example, spouses in a second marriage who want to leave pre-marriage assets to children from a prior marriage but also want to take care of their spouse, could purchase life insurance payable to the surviving spouse while benefitting children with the pre-marital assets. Business owners who want to make sure their surviving partners have the capital to continue to run the business may purchase life insurance on each other or through the business. Parents who want to keep a beloved vacation home in the family but realize the expense of maintaining the property will be a burden to their children can use life insurance to provide funds to pay the costs of maintaining the home following their deaths. Families with a special needs child who want to ensure that funds are available for the child’s lifetime to provide for housing or other needs may use life insurance to fund a trust for the child.
4. Life insurance can be a Good Way to Pay Estate Taxes. For those who have a taxable estate (i.e., more than $11.7 million federally in 2021 and $1 million in Massachusetts), life insurance can be a good way to provide liquidity to pay that tax which is due 9 months after death. However, if the life insurance policy is owned by the deceased, then the life insurance proceeds are added to the taxable estate thereby increasing the estate tax liability. Purchasing and owning life insurance in an Irrevocable Trust will prevent the life insurance proceeds from being part of the insured’s taxable estate thereby preserving the full value of the insurance for the family. With speculation that Congress may reduce the estate tax exemption amount to $3.5 million and increase the rate of the federal estate tax, the irrevocable life insurance trust may become a more frequently used planning tool.
5. Review your life insurance on a regular basis. Life insurance is not an asset that should be purchased and then never looked at again. As time goes by, needs change and life insurance purchased 10 years ago may no longer be sufficient or may no longer be needed. So-called ‘term’ life insurance means that the premiums for the policy are fixed during the term but the policy will expire or the premiums will increase significantly when the term ends. Term policies can be an excellent way to address a short-term situation such as providing funds for children’s education or paying off the mortgage. Once the children have graduated from college or the mortgage is paid, the purpose for which the insurance was purchased is no longer important. If the intention is that the insurance proceeds be available to support that vacation home you are leaving to your children or fund a trust for a special needs child, then a policy that will expire is probably not the right choice.

In my experience, life insurance is typically more complicated than it seems at first blush. It is advisable to work with an experienced life insurance agent, a financial planner, and an estate planning attorney to ensure that you purchase and retain insurance that meets your goals and is best suited for your needs, and own it in a way (in your name or in an Irrevocable Trust) that works with the rest of your estate plan. If you have questions about how life insurance fits into your estate planning, please don’t hesitate to contact us to schedule a consultation with one of our attorneys.

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

September, 2021