Wills

An Estate Planning Lesson from Roseanne Barr?

June 15, 2018 by Attorney Suzanne Sayward

Regardless of whether you agree or disagree with the decision to cancel the Roseanne show following Roseann Barr’s racist tweet of last month, I think everyone can agree that her failure to be thoughtful about her actions led to her downfall and the downfall of her very successful show. While there may be debate about the appropriateness of the punishment Roseanne received (too harsh? too light?), most people feel badly for Roseanne’s co-workers who will pay the price for her bad behavior by losing their jobs. They are no doubt angry and feel betrayed by her. The same is true when it comes to estate planning strategies; we betray the ones we care about when fail to follow estate planning basics. Failure to act thoughtfully with respect to your estate plan can leave the people you love feeling angry and betrayed too.

In many ways, creating an estate plan is not something you do for yourself; it is something you do for the people you love. Setting up wills, trusts and estate plans are crucial for your legacy. If you become incapacitated because of an accident, a stroke or an illness and you have not created a Durable Power of Attorney and a Health Care Proxy, your family is going to have a difficult time helping you. Without these basic estate planning documents no one, not even your spouse, has the legal authority to gain access to your assets or to make decisions about your care. One or more family members may need to go to court to be appointed as your conservator and/or guardian so that bills can be paid, investments can be managed and proper care can be arranged. This will cause your family members stress and take hours of their valuable time to do things that could have been avoided with some advance planning.

Likewise, if you die without a Will, it will be more difficult and expensive for your family to settle your estate. Even worse, your estate may not be distributed in the way you thought it would or how you wanted. These unintended consequences can leave bad feelings among survivors that can last for years. Proper estate planning could also be considered good inheritance planning. It is not uncommon for clients to tell me how their parents failed to do any planning and as a result the house was lost to long-term care costs, or a second spouse ended up with the treasured family cottage, or there were tens of thousands of estate taxes payable that could have been avoided with a little bit of advance estate planning.

In my experience, no one wants to leave their family with a mess of complex estate planning issues. Yet failing to act thoughtfully by creating an estate plan and keeping it updated often means a mess is what is left. Roseanne’s action hurt many people – people she had no intention of hurting. Don’t let failing to plan leave your loved ones with the bad feelings that unintended consequences so often produce –and of course, think before you tweet!

June, 2018

Five Ways to Get Yourself in Trouble when Serving as a Fiduciary of a Will or Trust

May 4, 2018 by Attorney Suzanne Sayward

A fiduciary is a person who stands in a position of trust to one or more other people typically with respect to the safeguarding or management of assets. For example, the person you name to carry out your wishes in your Will (Personal Representative) or under your Trust (Trustee) is a fiduciary. This is important to know because fiduciaries are held to a higher standard of care under the law and if they fail to live up to this standard they can find themselves in big trouble. When someone agrees to serve as a fiduciary, the primary goal should be to properly carry out the duties of the position. A good secondary goal is not to get sued while doing it.

If a fiduciary is looking for trouble, here are five actions he or she can take to find it (or conversely, five things you shouldn’t do if you want to stay out of trouble when dealing with Estates and Trusts).

1. Co-mingle the estate or trust assets with your personal assets. One of the best ways to incur personal liability for your service as a fiduciary is to deposit the estate or trust funds into your personal account and then treat those funds as your own. Co-mingling estate or trust funds with the fiduciary’s personal funds is absolutely prohibited. The correct way to title an estate or trust account is with the name of fiduciary clearly identified as Personal Representative or Trustee. For example, “Mary Smith, Personal Representative of the Estate of Lola Jones.”

2. Ignore the beneficiaries of a Trust or Estate. In my experience, one of the surest ways for a fiduciary to increase the likelihood that the beneficiaries will file a claim against him for breach of duty is to fail to communicate regularly with the beneficiaries. When that happens, the beneficiaries tend to leap to the conclusion that the fiduciary is doing something bad. It is often a lack of communication that brings disgruntled beneficiaries to my door seeking redress against the Personal Representative or Trustee. Failure to communicate with the beneficiaries is not only a violation under the Massachusetts Uniform Trust Code (MUTC) which specifically requires a Trustee to keep the beneficiaries informed about the administration of the trust and to promptly respond to a beneficiary’s request for information, it is also just not in the fiduciary’s best interest.

3. Disregard the instructions in the Will or Trust. The Personal Representative of an estate and the Trustee of a Trust usually have broad authority to deal with the estate or trust assets. However, they do not have the option to disregard the terms of the Will or Trust, even if they believe they are doing so for a good reason. For example, I have had fiduciary clients who told me that they made a distribution to someone who is not named in the Will because, ‘I know my mother would have wanted that.’ Or who decide they are going to rent out the house even though the Trust directs that is be sold. Big problem.

4. Don’t ask the beneficiaries for their input. As noted in number 3, a fiduciary has broad power to administer the estate or trust. Unless the Will or Trust instrument directs otherwise, this person decides when and at what price to sell real estate, which financial institutions and advisors to work with, how to invest the funds, and if and when to make an early distribution to the beneficiaries. However, just because the fiduciary has the authority to make all of these decisions without the input of the beneficiaries, does not mean that he or she should do so. If a goal of the fiduciary is not to be sued by the beneficiaries, then soliciting the input of the beneficiaries as to big decisions such as the sale of real estate, or at least notifying them promptly when a decision is made (see number 2 above) will go a long way toward achieving that goal. Some fiduciaries may even ask the beneficiaries to ‘sign off’ on a decision such as the listing price of mom’s house in order to avoid a later allegation that the Trustee was not acting in the best interest of the beneficiaries.

5. Keep sloppy (or no) records. If you want to make sure that you are liable to the beneficiaries for breach of your fiduciary duty, don’t keep a record of anything you do. One of the first responsibilities of a Personal Representative or Trustee is to determine the assets of the estate or trust and then notify the beneficiaries as to his or her findings. This is called the Inventory. The Inventory should identify each asset of the estate or trust and its respective value. Failing to timely provide the beneficiaries with an Inventory is a de facto breach of duty. In addition, a fiduciary is required to account to the beneficiaries for all financial transactions. This includes an itemization of the funds received by the estate or trust such as interest, dividends, tax refunds, etc. as well as a detailed record of disbursements such as payment of the decedent’s medical bills, expenses incurred to maintain real estate, attorney’s fees, and the fee paid to the fiduciary.

6. Go it alone. Here is bonus tip for fiduciaries who want to increase the likelihood they will be sued for breach of duty – don’t seek the advice of any professionals. Serving as a fiduciary is an enormous responsibility and carries with it many duties that will be unfamiliar to most people who are named to serve as Personal Representative or Trustee. Expenses such as legal fees, accounting fees, appraisal costs, etc. are paid from the estate, not from the fiduciary’s own monies. If you are in this position, do yourself and the beneficiaries of the estate or trust a favor and engage experienced professionals to represent and advise you.

Most people feel that being named as the Personal Representative or Trustee is a great honor. It means that person had the faith and confidence that you could perform the duties and responsibilities required by the job.

If you have been named as the Personal Representative of a Will or as the Trustee of a Trust contact the Dedham law firm of Samuel, Sayward & Baler LLC and let us guide you through the process so that you avoid the pitfalls that many first-time fiduciaries fall into.

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.

May, 2018

Ask SSB

April 4, 2018 by Attorney Suzanne Sayward

Q: My mom passed away a few months ago. She had a will that leaves everything to me and my sister equally. That means we don’t have to go through probate, right?

A: I wish I could get a hold of the person who started this tale: “If you have a will, you do not need to go through probate.” This is one of the most common misconceptions among our clients. I am happy to dispel this rumor once and for all!

The concept of ‘going through probate’ actually has nothing at all to do with whether or not you have a will. A will is simply a document that outlines who you would like to receive your assets when you pass away. A will states who you would like to serve as your personal representative (formerly known as executor), whether you have specific instructions about the distribution of certain assets and if you have minor children, who you would like to serve as guardian for those children. If you do not have a will, the Commonwealth of Massachusetts has one for you. This is called the intestacy statute. However, you may not agree with what the intestacy statute says—sometimes its terms are surprising. Having a will overrides the intestacy law and allows you to state clearly what your wishes are once you pass away. It can also make the probate process run more smoothly as it allows you to make certain elections in the document (such as a waiver of surety on a bond or license to sell real estate) which can often expedite the whole process.

The answer to your question lies not in the having or not having of a will but rather what assets a will controls and what processes you have to go through to gain access to certain assets when a person passes away. This is where probate comes in. A will only has control over probate assets—these are assets that are held in the deceased person’s sole name with no joint owners and no named beneficiaries. Most IRAs, 401Ks, life insurance policies and investment accounts give the owner the ability to name a beneficiary. This beneficiary designation takes priority over the terms of the will with respect to that particular asset. Even better, the beneficiary often has immediate access to the asset upon providing a death certificate. Likewise, assets titled in the name of a trust are non-probate assets which pass according to the terms of the trust and not the decedent’s will. Therefore, these assets are not subject to the probate process either.

So, the act of going through probate is only required if the deceased person has probate assets (remember—assets with no joint owner, named beneficiary and not held in a trust). The will is the roadmap that determines how the probate process will play out but having a will, in and of itself, does not avoid probate. There you go—this myth is BUSTED!

What does a Snowstorm have to do with Estate Planning?

March 26, 2018 by Attorney Suzanne Sayward

The snows and no-snows of March set me to thinking about disruption. When I was a kid, waking up to a foot of snow was one of the most joyful events of my life – especially if it happened on school day. As an adult, I have the opposite reaction. In fact when I looked out the window on March 22^nd and saw that the meteorologists’ prediction of a huge overnight snowfall was a complete bust, I was filled with delight. In thinking about my two-selves’ different reactions to snow, I came to the conclusion that it is all about disruption. As a kid, I loved unexpected disruptions – a snow day, a fire drill, a fight at recess. As adults we are not so fond of disruptions – some people even dislike holidays! In many ways, undertaking estate planning is about planning to minimize disruption when the unexpected happens. The events that we are planning for when we create an estate plan are sickness and death. If you, your spouse, your parent or your grandparent, gets sick or has an accident and is incapacitated as a result, that is a very disruptive event not only to person who is incapacitated but also to family members who are caring for the ill person. Decisions about health care will need to be made, bills will need to be paid, maybe the house will need to be sold. These added tasks are disruptive to the lives of the people who must take them on, but it is even worse if the incapacitated person does not have a Health Care Proxy and Durable Power of Attorney that legally authorize people to make health care decisions, pay bills, deal with real estate, file tax returns, etc. If no such documents exist, then family members are forced to petition the probate court for guardianship and/or conservatorship in order to obtain the legal authority to make decisions and take action. Believe you me, there is nothing quite so disruptive as having to deal with the probate courts – not to mention the expense involved in any court proceeding. Similarly, if someone dies without a Will or Trust, the cost, time and aggravation of settling the estate are multiplied – more disruption! You can reduce the disruption caused by incapacity and death by getting your affairs in order and creating (or updating, if it’s been a while) an estate plan. As to the next snow storm….my advice, flee to Florida!

March, 2018

Give the Gift of an Estate Plan – Yours!

December 18, 2017 by Attorney Suzanne Sayward

In this season of giving, I thought it would be a good idea to chat about one of the best gifts you can give your family. It is not a fancy vacation or a 60-inch TV – it is the gift of an estate plan – yours. When you create an estate plan (i.e. your Will, Durable Power of Attorney, Health Care documents and perhaps a Trust), you are doing something important and valuable for yourself by making sure that your wishes are carried out upon your death or in the event you are incapacitated. You are also doing an enormous favor for your family who will be left behind to pick up the pieces in the event of your incapacity or upon your passing.

By creating a Durable Power of Attorney, Health Care Proxy, and related documents which empower someone to pay your bills, deal with your insurance, take distributions from your retirement accounts, and make decisions about your medical care should you become incapacitated, you are avoiding the need for your family members to seek a guardianship or conservatorship in the Probate Court.

By creating a Will you are making sure your wishes about the distribution of your assets at death are clear, and that provisions that will streamline the Probate process are in place. If you take the further step of creating a Trust, which will allow your assets pass to your family outside of Probate, you are greatly reducing the time, cost and aggravation associated with the settlement of estates. You are also preserving your privacy which can protect your estate from claims by creditors, former business partners, or ex-spouses.

In my estate planning and elder law practice I see many families in crisis either when someone has taken ill or when a loved one had passed away. In situations where planning has been done, family members are in a far better position (in terms of direction, time, and cost) than are those where no planning was done.

This holiday season, treat yourself and your family to the gift of your estate plan. You will gain peace of mind of knowing that you have a plan in place that will make things as easy as possible for the family members you leave behind.

December 2017

Planning for Your Digital Assets

September 14, 2017 by Attorney Maria Baler

Digital assets did not exist 25 years ago, but they are now part of our everyday existence. Things like the contents of our Facebook, Twitter and Instagram accounts, photographs stored online, digital music, YouTube videos, on-line gaming accounts, domain names, and email are all digital assets – a collection of our digital property and electronic communications. To the extent these accounts contain information that you would like someone to be able to access after your death or incapacity, it is necessary to plan to provide the appropriate authority and instructions for what you want done with these “assets.” For some types of these assets, planning is crucial to prevent financial loss (i.e. the loss of a domain name used for business purposes), to protect sensitive personal information (on-line dating websites), to avoid identity theft, and to allow access to valuable assets (think bitcoin, an author’s manuscript, or family photographs).

Most of us create digital assets without a thought as to what will happen to those “assets” if we are no longer around or able to access them. Even if you share your password for your on-line accounts with a trusted person, keep in mind that it is a violation of federal law for anyone other than you to access your accounts (because password sharing is prohibited under most terms of service agreements) unless the person with whom you share your password has the legal authority to access your account.

This is an emerging area of estate planning. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) is an attempt to create some clarity in this area. Massachusetts is one of only a handful of states that has not enacted this law, or even introduced it for consideration. Hopefully our state legislature will not delay much longer. The law allows fiduciaries to take action to marshall and protect the digital assets of the deceased or incapacitated person on whose behalf they are acting. As a rule, access is difficult to obtain because on-line providers all have different policies or terms of service agreements with their customers. The Uniform Act’s purpose is to bring some uniformity to these policies as they relate to fiduciaries, and to extend a fiduciary’s power over assets in a deceased or incapacitated person’s “estate” to include digital assets, giving a fiduciary the legal right to access online accounts.

The Massachusetts Supreme Judicial Court is in the process of deciding the case of Ajemian v. Yahoo!, Inc. In this case Mr. Ajemian died with a Yahoo email account, and Yahoo would not allow access to his account to his siblings who were the administrators of his estate. This case has been bouncing around the court system since 2007 on procedural grounds, including whether the case had to be decided by a California court (where Yahoo is located) or whether the case was properly decided in Massachusetts where Mr. Ajemian was a resident prior to his death. The Court now seems poised to decide the substantive issue of access to emails, after oral arguments in March of this year.

Here are some tips to manage your digital assets until Massachusetts law and a path to access becomes clearer:

If an online entity offers a way for you to give permission or access to your digital assets stored with that company, pay attention and follow the directions. For example, Facebook allows you to designate a Legacy Contact (Settings/General Account Settings/Manage Account) who can manage your account after your die, or you can choose to have your account deleted if you pass away. Google allows you to control what happens to your account through their Inactive Account Manager feature (My Account/Personal Info and Privacy/Control your Content). Here you can designate when your account will be considered inactive and what will happen to your Google account, and designate one or more people who will have access to whatever portions of your Google account you choose.
Update your estate plan documents, specifically your Power of Attorney, Will and Trust, to ensure those documents provide express permission for the fiduciaries named in those documents to access your digital assets, and express direction regarding what should be done with specific digital assets at death. In our office, we include express permission for access in these documents, and provide our clients with a Digital Assets Memorandum that can be used to record instructions about digital assets.

Keep in mind that if you have not used an online entity’s prescribed method of giving someone permission to access your account, and do not have express permission and direction in your estate plan documents, the company’s Terms of Service Agreement will govern. In such a case, you and your digital assets are at the mercy of the online provider, which may not allow access following your death or incapacity.

September 2017

Five Things a Well-structured Estate Plan Can Do For Your Children

July 31, 2017 by Attorney Maria Baler

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:

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).

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.

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.

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.

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

Five Ways to Make Sure Health Care Wishes are Carried Out

April 1, 2017 by Attorney Maria Baler

Maria_144px Estate 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 10^th anniversary of National Healthcare Decisions Day. Here are five ways you can ensure your care preferences are clearly documented and honored:

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.

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.

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.

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.

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

Five Reasons to Call an Estate Planning Attorney

February 1, 2017 by Attorney Maria Baler

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

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

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

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

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

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

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

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

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

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

February 2017

Happy Anniversary to the Massachusetts Estate Tax!

January 19, 2017 by Attorney Maria Baler

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

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

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

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

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

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

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

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

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

January 2017