Estate Planning

The Particular Importance of Estate Planning for LGBTQ Individuals and Families

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One of the goals of proper estate planning is to reduce the risk of conflict in the administration of your estate and the carrying out of your wishes both after your death and during periods of incapacity while you are alive. Though we all like to think that our families (both our legally recognized families and our chosen families) and loved ones will come together and unite during times of crisis, it is unfortunately not uncommon for such crises to lead to painful, emotionally charged conflicts.

Such cases are even more common when it comes to LGBTQ individuals whose legally recognized relatives disapprove of their lifestyle. Although acceptance of LGBTQ individuals is far greater than it used to be, LGBTQ individuals still risk being disowned, shunned, and/or shamed by their relatives if and when they come out. With that in mind, I wanted to take a moment this Pride Month to talk about the particular importance of estate planning for LGBTQ individuals and families.

The most critical thing to understand is that, in the absence of estate plan documents that say otherwise, the law favors biological and legally recognized familial relationships over other relationships. Without a valid Last Will and Testament, upon your death the assets in your individual name will pass by law to your closest legally recognized relatives (known as your “heirs at law”) through a process known as “intestacy.” In Massachusetts, even if you are married, if you die without a Will, there are circumstances where your individually held assets will be distributed among your surviving spouse and your surviving parent(s).

Similarly, if you become incapacitated during your lifetime without a valid Durable Power of Attorney and Health Care Proxy, it may become necessary to have a guardian and/or conservator appointed by the Probate Court. As in the intestacy process, the guardianship and conservatorship processes favor biological and legally recognized relationships, giving priority to your spouse and parents to be appointed as your guardian and/or conservator over romantic partners and close friends.

While having a comprehensive estate plan in place can close off many opportunities for disapproving legally recognized relatives to take control of an LGBTQ individual’s estate in times of crisis and potentially shut out or cut off the individual’s chosen family (i.e., romantic partners, close friends, etc.), not all estate plans are created equal on this front. In particular, if you have an estate plan that relies on a Last Will and Testament to control the disposition of assets after death, a public probate process will need to be initiated after your death in order to validate the Will. Part of that process involves giving notice to your heirs at law. This once again gives disapproving relatives an opening to object to the proceedings and attempt to assert control over your estate.

By contrast, a comprehensive estate plan designed to avoid the probate process will greatly reduce the ability of disapproving relatives to cause trouble. While the probate process requires that notice be given to those who would inherit in the absence of a Will even if they are not named as beneficiaries in the Will, under a Revocable Living Trust, only the beneficiaries named in the trust document are entitled to notice. Thus, if you want to ensure that your wishes are followed and that the people you choose to carry out those wishes are able to do so without interference, you should contact an experienced estate planning attorney and create a plan to achieve your goals today.

 

June, 2021

 

© 2021 Samuel, Sayward & Baler LLC

What Are Five Duties of a Probate Estate’s Personal Representative?

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By Abigail V. Poole. Esq.

Sometimes I like to think of administering a probate estate as similar to investigating and solving a mystery.  The Personal Representative (formerly known as Executor) of the estate is the Detective. The Personal Representative takes steps to administer the estate by accessing and consolidating estate assets much like a Detective discovers clues and pieces them together one at a time to solve a mystery. Simultaneously, the Personal Representative keeps in mind certain duties while performing these tasks due to his or her fiduciary position much like a Detective who follows the laws while investigating the mystery. Here are five duties the Personal Representative must obey while “solving the mystery” of probate administration.

  • Follow Directions 

The Personal Representative’s most important overall duty is to follow the directions left in the deceased’s Last Will and Testament and the relevant Massachusetts laws.  The Will works hand-in-hand with the laws; it must be filed with the probate court, which approves the appointment of the Personal Representative. If the deceased did not leave a Will expressing the deceased’s intentions, then the intestate laws of Massachusetts govern the estate administration. 

The Personal Representative is also duty-bound to administer the probate estate expeditiously and efficiently in a way that is consistent with the best interests of the estate. For example, if the deceased possessed an expensive diamond necklace at the time of her death and she stated in her Will that the necklace should be distributed to her daughter, then it is the Personal Representative’s responsibility to do so.  However, if the diamond necklace is the only valuable asset and the estate has significant expenses and debt, then the Personal Representative may need to sell the diamond necklace to pay the estate expenses and debt instead of distributing the necklace.

  • Be Loyal and Prudent

The Personal Representative has a duty of loyalty.  The Personal Representative’s actions must be impartial toward all the parties involved (i.e., he or she cannot favor one party above another unless directed by the law or Will). The Personal Representative is also obligated to administer the estate with care and prudence by protecting the interests of the estate and administering the estate for the benefit of all the beneficiaries (the ultimate recipients of the estate distributions). Oftentimes, at the beginning of the probate process the Personal Representative may not have accurate information about all the assets owned by the deceased at the time of death. This means there may be valuable assets discovered after the Personal Representative’s appointment. In the case of the diamond necklace, it would be prudent of the Personal Representative to refrain from distributing or selling the diamond necklace until all the assets are discovered and weighed against the anticipated estate expenses and debt.

  • Find the Assets

The Personal Representative must investigate, determine, collect and inventory all the estate assets after appointment. Typically, an estate bank account is opened to consolidate and retain the balances from the deceased’s individual bank accounts. The Personal Representative is responsible for determining the value of the assets as of the deceased’s date of death. With respect to the diamond necklace, the Personal Representative should have it appraised to determine its value in the event it needs to be sold to pay the estate expenses and to include on the estate inventory. The inventory is a list of all the assets of the estate and their values that will be provided to the probate court or beneficiaries.

The Personal Representative is obligated to collect the income, interest and refunds due to the deceased or the estate, and dividends from stock. 

  • Protect the Assets and Pay the Expenses

The Personal Representative has a duty to secure, safeguard and manage the estate assets.  The diamond necklace should be securely stored until a decision is made to distribute or sell it, and insurance maintained for it, as necessary. The Personal Representative is responsible for collecting payments on any outstanding loans due to the deceased’s estate.

The Personal Representative must also pay estate expenses, such as funeral costs, fees to file assorted tax returns, and the fees of professionals to accomplish these goals (e.g., accountant, attorney, jewelry appraiser). If there is outstanding debt, such as a mortgage, credit card or Medicaid claim, the Personal Representative must prioritize payment of the debt according to the laws.

A crucial responsibility of the Personal Representative is to track all the income and expenditures of the estate. These records will assist the Personal Representative with making decisions regarding payment of expenses and debt during the administration of the estate.  It will also demonstrate to the beneficiaries and the probate court that the Personal Representative administered the estate properly via an account (report).

  • Distribute the Assets

The final obligation of the Personal Representative is to distribute the remaining probate assets to the beneficiaries as directed in the Will or by law. Luckily, the Personal Representative discovered other assets to cover the estate expenses so the diamond necklace was distributed to a grateful daughter.

Every good Detective has a partner to help solve the mystery.  Samuel, Sayward & Baler LLC can partner with you to find, protect and distribute the probate assets in accordance with the deceased’s instructions or the laws. Our attorneys are dedicated to guiding you through the probate administration process to ensure you adhere to your duties as the Personal Representative to successfully complete settling the estate.

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. 

June, 2021

© 2021 Samuel, Sayward & Baler LLC

 

Five Proposed Changes to the Estate and Gift Tax Laws

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After the spending spree necessitated by the Coronavirus (think CARES Act, stimulus payments, vaccine development support, etc.), coupled with President’s Biden infrastructure building plans, it is not surprising that Congress has turned its focus toward revenue raising as we emerge from the pandemic.  Revenue raising proposals usually mean finding a way to collect more tax dollars.  At the end of March, Senators Bernie Sanders and Sheldon Whitehouse introduced a bill they call, “For the 99.5 Percent Act” which proposes sweeping changes to existing estate and gift tax laws.  Read on for five of the most significant proposed changes.  

  1. Reduce the current $11.7 million federal ESTATE tax exemption to $3.5 million.  For the vast majority of Americans, the federal estate tax (the ‘death tax’) has been a non-issue since 2010 when the exemption was raised to $5 million and indexed for inflation.   The exemption is the amount that each person is permitted to pass on free of any federal estate tax at death.  Because $5 million was not high enough for some people, the exemption was increased to $11 million under President Trump, albeit with a sunset provision that reduced the exemption back to $5 million at the end of 2025.  The Sanders/Whitehouse proposal calls for rolling that exemption back to $3.5 million and indexing it for inflation.  While this rollback (if it happens) will mean that more estates will be subject to federal estate tax, the vast majority of estates will not be impacted because most Americans do not have an estate worth more than $3.5 million ($7 million for a married couple).  Those folks whose estate is more than the proposed reduced exemption amount should keep an eye on this legislation and explore their options for undertaking some planning before the end of 2021.
  2. Increase the rate of taxation on federally taxable estates.  Under the current federal estate tax law, taxable estates which exceed the exemption are subject to tax at the flat rate of 40%.  That means that on a $20 million estate there will be federal estate tax payable of $3,320,000 ($20 million – $11.7 million x .40).  Under the Sanders/Whitehouse proposal, the estate tax rate would be increase to 45% for taxable estates valued between $3.5 million and $10 million, 50% for estates over $10 million but less than $50 million, 55% for estates between $50 million and $1 billion, and 65% for estates over $1 billion.  While these rates are super high, the number of estates subject to them will be very small.
  3. Limit total annual exclusion gifts to two-times the amount of the annual exclusion.  The annual exclusion amount is the amount that each person may gift to any number of people in any calendar year without having to file a gift tax return and without reducing that person’s lifetime gift tax exemption.  In 2021 that amount is $15,000 (a base amount of $10,000 indexed for inflation).   For example, under the current law, I can give up to $15,000 to each of my two children, to my seven nieces and nephews, to my two siblings, and to my mailman, if I am so inclined, without any impact on my lifetime gift tax exclusion.  There is no limit on the number of people to whom I can gift up to $15,000 in any calendar year.  To the extent I give more than $15,000 to any one person in any one calendar year, I will ‘chip-away at’ my lifetime gift tax exemption.  For example, if I gave my child $115,000 during the year, I will have made an excess gift of $100,000.  This will reduce my lifetime exemption from its current $11.7 million to $11.6 million ($11,700,000 – $100,000 = $11,600,000).Under the proposed law, annual exclusion gifts would be limited to two-times the amount of the annual exclusion.  That means that if the annual exclusion amount is $15,000, I could give each of my two children $15,000 in one year but could not give any other gifts in that year without reducing my lifetime gift tax exemption.
  4. Reduce the current $11.7 million lifetime GIFT tax exemption to $1 million.   Under the current federal gift tax law, each person has an $11.7 million lifetime gift tax exemption, which is the amount they can give away during their lifetime before any gift tax must be paid.  The proposed law would reduce the gift tax exemption to $1 million, meaning that cumulative excess gifts of more than $1 million during someone’s lifetime will incur gift tax.  The reduction of the gift tax annual exclusion amount coupled with the proposal to reduce the federal gift tax exemption from its current $11.7 million to $1 million is likely to significantly curtail estate tax planning in the future if these provisions are enacted, since tax planning done to reduce the size of your taxable estate often involves gifting assets.  People who have large estates and who want to undertake planning to reduce their federal estate tax should do so before the end of 2021 in order to take advantage of the current $11.7 million gift tax exemption amount, which will be reduced to $1 million under the new law.
  5. Limit generation-skipping transfer trusts to a term of 50 years.  The generation skipping transfer tax (GSTT) is a tax imposed on transfers to ‘skip’ beneficiaries (think grandchildren).  The GSTT is in addition to the federal estate tax and is assessed at the same high rate.   In order to mitigate the harshness of the tax, there is an exemption from the GSTT which is currently equal to the amount of the federal estate tax exemption.  That means that under the current law a person with an $11.7 million estate could leave his entire estate to his grandchildren and there would not be any GSTT payable.  Typical GSTT planning involves creating trusts for multiple generations to shelter family wealth from diminution from the estate tax.  In this way, the inheritance from grandpa may escape estate taxation for 100+ years, preserving family wealth for future generations.  The Sanders proposal would limit the term of such trusts to 50 years, requiring the payment of estate tax every 50 years.

The above changes are only proposals and we don’t know what the final law will be.  The revenue raising plan submitted by President Biden does not contain these provisions so perhaps none of them will be enacted.  However, if you have an estate that you anticipate would be subject to federal estate tax if these proposals are enacted, and if you are interested in exploring options for reducing the tax in the event one or more of th`ese proposals become law, you should take action soon.  

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 www.ssbllc.com or call 781/461-1020.

May, 2021

© 2021 Samuel, Sayward & Baler LLC

Five Things to Know about Testamentary Trusts

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By Attorney Maria C. Baler

Testamentary Trusts are less popular than their well-known cousin the Living Trust, but in the right situation can be the perfect solution to a vexing problem – protecting assets for a surviving spouse when he or she may need nursing home care. Testamentary Trusts may be the one solution where it may be possible to have your cake and eat it too in the world of long-term care planning.

Here are five things to know about Testamentary Trusts

1. What is a Testamentary Trust?

The word “testamentary” means “relating to or bequeathed or appointed through a Will.” The “testament” in the phrase “Last Will and Testament” comes from this definition. A Testamentary Trust is, as the definition implies, a trust that is created by the terms of a Will. Because the Will does not take effect until death, the Testamentary Trust created by the Will does not come into existence until after the creator (or “testator”) of the Will has died.

This is very different than the more popular Living Trust, which is a trust created by the maker of the trust (the “grantor”) during the grantor’s lifetime. Living Trusts can own assets during the grantor’s lifetime; Testamentary Trusts cannot. Assets owned by a Living Trust at the grantor’s death avoid probate which is one of the primary reasons for creating a Living Trust. You may recall that probate is the court proceeding necessary to transfer title to assets owned by a person in his or her name alone (with no beneficiary named) at death.

Because Testamentary Trusts do not come into existence until after death, they cannot own assets during their creator’s lifetime. The assets that will be held in the Testamentary Trust after the creator’s death will pass through the probate estate of the testator, and into the Testamentary Trust as provided under the terms of the creator’s Will, to be held in trust for the benefit of the trust beneficiary.

2. Why Create a Testamentary Trust?

If a Testamentary Trust does not allow you to avoid probate with the trust assets, and does not come into existence until after death, why would you create one?

The answer is in the regulations that determine whether assets held in a trust created by a husband or wife are “countable” when determining whether or not either will be eligible for Medicaid benefits to pay for nursing home care.

If a husband creates a Living Trust and transfers $500,000 into that Trust during his lifetime, and names his wife as the beneficiary of that trust after his death, the Trust assets will be fully “countable” if either husband or wife tries to qualify for Medicaid benefits to pay for nursing home care during their lifetimes. If the husband passes away, and if his Living Trust allows the Trustee to use the trust assets for his wife’s benefit during her lifetime, the Trust assets, and any other assets the wife may own, will be “countable” and must be spent on the wife’s care before she will be eligible to receive Medicaid benefits to pay for her care.

However, Medicaid regulations provide that if a Testamentary Trust is funded by Will at the death of one spouse, and the assets are held in that Testamentary Trust for the benefit of the surviving spouse, the assets in that Testamentary Trust will not be countable in determining the surviving spouse’s Medicaid eligibility. This is an important distinction and one that can allow a spouse to set aside assets in trust for the benefit of his or her surviving spouse.

A Testamentary Trust works especially well in situations where one spouse is ill and is being cared for by the other spouse. In such a situation, if the caregiver spouse were to die, the ill spouse would almost certainly need a nursing home level of care as they could not live alone or care for themselves. In this case, if the caregiver spouse (the husband) creates a Testamentary Trust through his Will for the benefit of his wife, and if the caregiver spouse dies before his wife, any assets owned by the caregiver spouse in his name alone would pass through probate and fund the Testamentary Trust created by his Will for the benefit of his wife. The Trust assets could be used for his wife’s benefit during her lifetime, to pay for anything his wife needs that is not covered by Medicaid – things like flowers, books, hearing aids, haircuts, a new television, new clothes, companions or additional caregivers, or any number of other things outside of the cost of skilled nursing care. When the wife passes away, any assets remaining in the testamentary trust will be distributed according to the Will’s provisions – for example, to the couple’s children, or other individuals or charities.

3. Who Can be the Trustee of a Testamentary Trust?

The Trustee of the Testamentary Trust is responsible to manage the Trust assets for the benefit of the Trust beneficiary – the wife in the previous example. Anyone other than the wife can be the Trustee of the Testamentary Trust for the wife’s benefit. For example, when the husband creates his Will with a Testamentary Trust for his wife’s benefit, he names his son Jack as the Trustee. Jack will have the authority to manage and invest the assets in the Testamentary Trust after his father’s death, and the discretion to use the assets in the Testamentary Trust for his mother’s benefit during her lifetime.

There may be a conflict of interest if Jack is also a beneficiary of the Testamentary Trust after his mother’s death, in that the fewer assets he uses for his mother’s benefit while she is living, the more that will be left for Jack and the other beneficiaries of the Trust after her death. This is something that should be considered when choosing the Trustee for the Testamentary Trust. It may be appropriate to choose someone who is not an ultimate beneficiary of the Trust after the primary beneficiary passes away.

4. Ownership of Assets is Key

In order for a Testamentary Trust to work properly, the creator of the Will that includes the Testamentary Trust – the husband in our example – must own assets in his name alone. Assets that are owned jointly will typically pass automatically to the surviving joint owner and will not pass through probate and into the Testamentary Trust at the husband’s death. Similarly, assets that name a beneficiary will pass automatically to the named beneficiary and not through probate and into the Testamentary Trust.

For this reason, if a Testamentary Trust is created, a change in the way assets is owned is often required. In our example, the home that is jointly owned by husband and wife should be transferred into the husband’s name alone, so that when he dies the home will pass via the husband’s Will into the Testamentary Trust for his wife’s benefit. Similarly, a joint bank account should be transferred into the husband’s name. Perhaps beneficiaries should be removed from CD accounts, etc. How assets should be restructured is specific to each person’s situation, and should be done only with the advice of an attorney. However, if assets are structured properly to fund a testamentary trust, those assets will be available to provide for the surviving member of the married couple even if they are receiving Medicaid benefits.

5. What are the Disadvantages of Using a Testamentary Trust?

One of the main disadvantages of using a Testamentary Trust is that the assets must pass through probate before they are protected under the Testamentary Trust. Probate is an expensive and time-consuming process, made even more time consuming by the impact COVID-19 has had on our probate courts in Massachusetts. For this reason, it may be best to make sure the intended Trust beneficiary has some assets in her name that can be used for living or care expenses until the Testamentary Trust is established when the probate process is complete.

If the husband in our example creates a Testamentary Trust, holding assets in his individual name in order to fund his Testamentary Trust at death will subject those assets to a Medicaid claim at the husband’s death if he receives Medicaid benefits during his lifetime. For this reason, Testamentary Trusts are typically created by individuals who have not and do not expect to receive Medicaid benefits during their lifetime, although their spouse likely will receive those benefits.

Finally, if the ownership of assets is not structured properly and thoughtfully, the Trust may not work at all, or may not work to its fullest advantage. For this reason, this type of planning should not be undertaken without advice from an experienced elder law and estate planning attorney.

Testamentary Trusts can be a very effective planning tool in a very specific situation – when one spouse wants to protect assets for the surviving spouse in the event the surviving spouse is expected to require a nursing home level of care and wishes to qualify for Medicaid benefits to pay for that care after the first spouse passes away. If this is your situation, seek out the advice of an experienced elder law and estate planning attorney who can assess your situation and discuss whether a Testamentary Trust is the right planning strategy for you.

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.

April, 2021

© 2021 Samuel, Sayward & Baler LLC

What Happens After the Death of a Person Who Received Medicaid Benefits?

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Medicaid, also known as MassHealth, is the joint federal and state program that provides public benefits to pay for the care of individuals who are medically and financially eligible because they do not have sufficient assets to cover the costs themselves.  If the individual was age 55 years or older and received MassHealth benefits during his or her lifetime, the MassHealth Estate Recovery Unit (“ERU”) is responsible for collecting reimbursement for the costs paid by the Commonwealth.  Reimbursement comes from the deceased person’s probate estate. Under Massachusetts law, the ERU must be notified when probate pleadings are filed with the probate court. Thereafter, the ERU files a claim against the probate estate to reserve the right to be paid from the estate. As the recipient’s house is typically the largest asset remaining to be probated, the ERU is often reimbursed from its sale proceeds.

A recent decision by the Supreme Judicial Court of the Commonwealth of Massachusetts highlights the importance of understanding what happens when a person who has received Medicaid benefits during his or her lifetime passes away.  In the Estate of Jaqueline Ann Kendall (SJC-12881, December 28, 2020), the Supreme Judicial Court held that the Commonwealth was not entitled to reimbursement from Ms. Kendall’s probate estate (consisting of 50% ownership of a house) because the ERU waited too long to file its claim.  While it may seem that the decision favors procrastination for families whose loved ones were MassHealth recipients, this is not necessarily the case. The ERU is permitted under the law to file probate pleadings if no one else steps forward, and may become more aggressive in doing so following the Kendall case.  

A better strategy for protecting your assets from nursing home costs is to be proactive and undertake long-term care planning.  This may mean conveying property subject to a retained life estate, or crafting a so-called “Medicaid Trust” or “Irrevocable Income Only Trust”, or other options that best fit your needs and goals.   

At Samuel, Sayward & Baler LLC, an elder care attorney knowledgeable in long-term care planning will guide you through the advantages and disadvantages of your long-term care planning options. Our estate planning attorneys can help you to avoid probating your house and the subsequent MassHealth claim, and preserve its value for the benefit of your children, in the event you require MassHealth benefits during your lifetime.

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 trust and estate planning, estate settlement and elder law matters. She is an active member and current 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 ssbllc.com or call 781/461-1020. 

January, 2021

© 2021 Samuel, Sayward & Baler LLC

 

Five COVID-Inspired Estate Planning Resolutions

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Looking ahead to this year’s resolutions, here are five estate planning resolutions that the COVID-19 pandemic has shown us to be more important than ever.

  1. Resolve to Have an Estate Plan

Most of the clients I meet who do not have a Will, Power of Attorney or other estate plan documents know they should have them, they have just put off this task – sometimes for much longer than they should, especially when faced with a global pandemic.  I met many people in 2020 who had put off estate planning and were suddenly in a panic to get it done given what was happening all around them.  If you are similarly situated, make it one of your goals for 2021 to get an estate plan in place.  A simple plan (Will, Power of Attorney, Health Care documents) is better than nothing at all.  If you have young children or assets in excess of $1 million, a Trust may be advisable to meet your planning goals.  An experienced attorney who prepares Wills and Trusts as the primary focus of their practice will give you options and let you decide which plan is best for you at the moment.  

If you already have an estate plan in place (good job!) resolve to review it this year to make sure the provisions of your plan still reflect your wishes.  If it has been more than five years since the documents were signed or you have had changes in your personal or financial situation, meet with an estate planning attorney (virtually of course!) to identify any changes that should be made.

  1. Resolve to Get it Done Right

The advice of an experienced attorney is not cheap and estate planning attorneys are no exception.  However, making sure decisions can be made for you if you are ill, making sure your assets go where you want them to go at your death, managing inherited assets properly for young beneficiaries, protecting assets for your family, avoiding probate and saving your beneficiaries as much income and estate tax as possible are important goals.  The way your estate plan is carried out will have a significant financial and emotional impact – positive or negative – on you and your family.  When something is this important, make sure it’s done right. The temptation to draft your own Will or other legal documents is there and is frankly a poor planning option.  In my 33 years of practice, I have yet to see a Will drafted by a client that will accomplish what the client thinks it will.  In fact, most self-drafted Wills create more problems than they solve.  Proper estate planning is not something that can be done cost-effectively on your own. Seek the advice of an experienced estate planning attorney, not a general practitioner who prepares Wills along with divorce and personal injury law.  Get it done right, and you will have the peace of mind that crossing this task off your list will bring.

  1. Resolve to make sure your Beneficiary Designations are Up-to-Date

Many of your most significant assets – life insurance, retirement accounts, annuities – will be paid to a designated beneficiary at your death.  Properly designating those beneficiaries is more complicated than it may appear, and understanding the implications of certain beneficiary designations is crucial. Designating a trust as beneficiary for the benefit of a young or disabled beneficiary can be instrumental in avoiding a lengthy and costly court proceeding to appoint a guardian, or avoiding the loss of public benefits a disabled beneficiary may be receiving. Understanding how distributions from retirement accounts work after the death of the account owner, and how different beneficiary designations will impact the income tax payable on those distributions is critical to making appropriate designations, and is something that changed significantly when the SECURE Act became law on January 1, 2020. Ensuring your beneficiary designations are consistent with your overall estate plan is vital to accomplishing your estate planning goals.

  1. Resolve to have Health Care Documents in Place

Much of the estate planning you do is for the benefit of your family or other heirs and will never impact you.  Creating health care documents that reflect your wishes is one area of estate planning that will directly and significantly impact you if you experience a period of illness prior to death.  This has never been more apparent than this past year, when so many people became incapacitated, and so quickly, by the COVID-19 virus.  Designating Health Care Agents to make health care decisions for you if you are unable to do so, making sure the people you want to be able to get information from your physicians can do so and will not be obstructed by privacy laws, and determining your care preferences and communicating them to your Health Care Agents and physicians are all crucial to making sure your health care wishes are carried out.  In Massachusetts, the legal document that we use to make sure these things happen are Health Care Proxies, HIPAA Authorizations and Living Wills. The person you name to make health care decisions for you is called your Health Care Agent. These documents are all part of a complete estate plan, and arguably the most important part from your perspective.

  1. Resolve to Make Sure People You Care About Have a Plan Too. 

Estate Planning is important for anyone over the age of 18. College-age children and elderly parents should have Durable Powers of Attorney and health care documents that will allow someone to make financial and health care decisions for them, and have access to information if they are ill or incapacitated.  This year underscored this need, as some college students fell ill far from home, and elderly parents were too sick to make decisions regarding their own care.   Parents of young children should name guardians for their children and create a trust to manage assets for young beneficiaries to avoid a child receiving control of an inheritance at age 18.  Parents who will leave a significant inheritance to their children should consider asset protection planning to protect inherited assets from a child’s creditors, divorcing spouse, etc.  Older couples or others with large estates can save their heirs significant estate taxes in Massachusetts with proper planning.  Elderly parents may want to plan to protect assets from long-term care liability.  

Now that 2020 is behind us and a COVID vaccine is here, we look back on 2020 grateful that we were able to continue to do our work, happy to be able to provide some peace of mind to our clients in these uncertain times, and hopeful that there are better days ahead.  For those of you who are fortunate enough to be alive and well in these challenging times, we recommend you take these resolutions to heart, and create or update your estate plan today.  If a friend or family member needs some inspiration to make estate planning a 2021 resolution, share this article with them.  Wishing you a Happy and Healthy New Year!

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.

January, 2021

© 2021 Samuel, Sayward & Baler LLC

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

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