tamburro-law

Ways To Protect Your Home From MassHealth Estate Recovery

Wed, 24 Dec 2025 18:20:12 GMT

WAYS TO PROTECT YOUR HOUSE FROM MASSHALTH ESTATE RECOVERY

In most instances, you can own a home and still get MassHealth coverage of your health or long-term care. While MassHealth has strict income and asset limits on eligibility, in most cases it doesn't count the home against those limits. On the other hand, as I often say, while they don't get you coming, they will get you going. If you sell the house either during your life or upon your death, MassHealth will seek to recover its costs of paying for your care.

If you are living in your home and you or your spouse is receiving community benefits, there's no limit on the value of your home. Likewise, if you are receiving nursing home care and your spouse is living at home, you can keep it no matter its value. And even if you are single and in a nursing home, your house will not be counted against the MassHealth asset limit of $2,000 (for nursing home residents) as long as you (1) state an intent to return home and (2) your equity interest in the home has a value of less than $$1,071,000 (2024).

While you can keep your home in most instances, MassHealth has the right to recover its costs of paying for your care through two methods. The first is by putting a lien on the house to secure repayment in the event you sell the house. The second, known as "estate recovery," is its right to repayment from your probate estate at your death. In most cases, your only substantial asset at death will be your home, since the rest of your savings will have to be spent down to qualify for MassHealth in the first place.

With proper planning, both the lien and estate recovery can be avoided. In considering planning techniques, you will need to distinguish between advance planning and crisis planning. Advance planning involves taking steps well before any need for long-term care may occur. Crisis planning takes advantage of opportunities that may be available even after you have a need for long-term care. The four planning options described below all involve advance planning, each with its own pros and cons. In a future blog post, I will discuss crisis planning steps you may take to protect the home.

Give it away. If you transfer your home to the ultimate beneficiary or beneficiaries of your estate, presumably your children, they will own it and it will not be subject to any claim by MassHealth. Be aware, however, that once you do so you will have a five-year wait for nursing home MassHealth due to its transfer penalty. An outright transfer also has the following drawbacks and risks: (a) You no longer own the house, so you will not be able to draw on its equity to pay your expenses without your children cooperating. (b) Likewise, you will not be able to sell the property and purchase another without your children's consent and cooperation. (c) Your children could decide that it's time for you to move from the house before you're ready. (d) Your children would face a higher tax on capital gain on the sale of the house both during your life due to the loss of the homeowner's $250,000 exclusion or after your death due to the loss of the so-called "step up" in basis upon your death. (e) The house could be subject to claim if one of your children were sued, went through a divorce, or passed away before you.
Life estate. A life estate is a form of joint ownership where the life estate owner has the exclusive right to live in the property during his life and then at his death it passes automatically to the so-called remaindermen. Since it avoids probate, MassHealth has no claim for estate recovery after you pass away. Contrasting the life estate with the drawbacks of an outright transfer, (a and b) you would still need your children's cooperation to sell or mortgage the property during your life. If it were sold, the proceeds would be divided between you and your children based on tables that take into account life expectancy and current interest rates, the older you are, the smaller your share and the larger the share of the remaindermen. Your share would be subject to claim for reimbursement to MassHealth. (c) No one can kick you out of the house. (d) Your children would receive a step up in basis at your death, avoiding an unnecessary tax on capital gain after you pass away. If you sold the house during your life, you could use your $250,000 exclusion against your share of the proceeds but not to reduce the tax on the capital gains attributable to your children's share. (e) While the ownership interest of each of your children in the life estate could be subject to claim during your life, no creditor or ex-spouse could take possession. Your right to occupy the premises would continue. To learn more about life estates, click here and here.
Irrevocable trust. A transfer of your home to an irrevocable trust for your benefit has certain advantages and disadvantages in comparison to an outright transfer or a life estate. Reviewing the same elements, (a) unlike the other two options, you would not need your children's cooperation to sell the house. (b) However, you probably would not be able to get a conventional mortgage or line of equity for a property in an irrevocable trust. (c) As with the life estate, you could stay in the house as long as you liked. (d) After your death, your children would get a step up in basis as with the life estate. It's not clear whether you would be able to use the $250,000 capital gains exclusion for a sale during your life. MassHealth has been attacking irrevocable trusts (more on this below), which has meant that we and other elder law attorneys are drafting them in ways that are more restrictive and thus no longer guarantee use of the capital gains exclusion. (e) The irrevocable trust protects your home from any claim or unfortunate circumstance happening to your children. The main drawback of an irrevocable trust over a life estate is that it cannot be reversed if you were to need care during the five years following its creation. While the creation of both a life estate and a trust create a five-year transfer penalty, if they're cooperative your children can convey back their interest in a life estate in case you needed MassHealth coverage during the subsequent five years and, as a result, undue the transfer penalty. This is not possible with an irrevocable trust. Advantages of the trust over the life estate include total protection of the proceeds of a sale during your life and protection for the home and for you in the event your children fall on hard times or disagree with you on how to manage the property.
Long-term care insurance. If you are insurable and can afford to purchase long-term care insurance, doing so can have at least two highly beneficial results. First, you will be less likely to need MassHealth because of your insurance coverage and even if you do ultimately need to apply for benefits. Second, MassHealth has a unique regulation that exempts the home from estate recovery if the owner has remaining long-term care insurance benefits when she moves to a nursing home. In other words, this exemption applies if she hasn't used up all of her benefits on home health or assisted living care. Of course, the issues of insurability and affordability may rule long-term care insurance out as an option.

As you can see, the pros and cons of these approaches are complex and it's difficult to predict in advance which will be the most beneficial for each client. However, each client's situation will include factors that argue for using one approach or another. An experienced elder law attorney can help you make this determination.

8 More Ways to Protect Your Home from MassHealth Estate Recovery: Part 2

The four steps I described all need to be taken at least five years before you apply for MassHealth. But what do you do if you can't wait five years, if you or a loved one already needs assistance or the writing is on the wall?

First, don't panic. MassHealth may well have a claim against your house or your loved one's house, but it might not be as much as you fear, in large part because MassHealth pays less for care than facilities charge on the private market. For instance, let's assume your mother is in a nursing home that charges $12,000 a month privately. MassHealth may only pay $8,000 a month. In addition, your mother must contribute her income. If that is $3,000, than MassHealth's out-of-pocket cost will be $5,000 a month or $60,000 a year, which will also be its claim against the house. While this is a lot of money, it would take 10 years to completely use up the equity of a home with a market value of $600,000, much longer than almost anyone lives in a nursing home. MassHealth's claim for home care will almost certainly be less because its cost will be less.

Second, in many cases you can either reduce or totally avoid this claim, even without advance planning. Here's how:

Rent out the house. Rental income will help defray expenses for maintaining the house and the net income will have to be contributed to the cost of care. This reduces MassHealth's cost and it's claim against the house. In our example above, if you rented out your mother's house and earned $2,000 a month after expenses, this would reduce MassHealth's out-of-pocket costs from $5,000 to $3,000 a month, and its claim from $60,000 for a year of care to $36,000, substantially reducing estate recovery upon your mother's death.
Transfer to a spouse. MassHealth's claim only applies to the estate of the person receiving benefits and there are no restrictions on transfers between spouses. So, if your mother is in a nursing home and your father is still living at home, it usually makes sense for your mother to transfer the house to your father. However, he also needs to sign a new will because it he dies before your mother, it won't help much if the house goes right back to her.
Transfer to a caretaker child. If you or one of your siblings lived with your mother for at least two years before she moved to a nursing home and a doctor will attest that due to your assistance your mother was able to delay moving to the nursing home for two or more years, then you (or your sibling) can qualify for an exception to the usual five-year penalty for transferring the house. Your mother can deed it over to you (or your sibling) and since it won't be in her estate it won't be subject to claim when she dies. Be aware, however, that there may be adverse tax consequences to such a transfer, so before taking this step, consult with an experienced elder law attorney.
Transfer to sibling with equity interest. While much less common than the caretaker child exception, MassHealth also exempts transfers to siblings who already have an equity interest in the home and who lived with the nursing home resident for at least a year before she moved to the nursing home. So, for instance, if your mother owned her home with her sister, and they lived together for at least a year before your mother moved to the nursing home, she could freely transfer the home to your aunt.
Transfer to disabled child. If you or one of your siblings is disabled, as evidenced by receiving Supplemental Security Income or Social Security Disability Income, then your mother can transfer the house to your or to that sibling without penalty .
Transfer to trust for disabled individual under age 65. In addition to being able to transfer the house to a disabled child, your mother can transfer it into trust exclusively for the benefit of anyone who is disabled and under the age of 65, whether or not that person is her child. This can include grandchildren and in-laws.
Transfer to anyone, if not in a nursing home. The penalty for transferring assets only applies to MassHealth coverage of nursing home care, not to community benefits. If your mother or other loved one is receiving care at home, she can avoid MassHealth's claim by transferring the house to anyone. However, this might not be advisable given that (1) MassHealth's claim is likely to be smaller in this case than for nursing home care, (2) this could cause problems if your mother were to need to move to a nursing home within five years, and (3) there could be adverse tax consequences.
Hardship waiver. If one or more of the people who inherit the house are low income and live i the house, they may qualify for a hardship waiver from MassHealth's estate recovery claim. Unfortunately, MassHealth's requirements to qualify for this waiver are extremely (inordinately, in my opinion) restrictive, so if you do qualify make sure that you follow the hardship waiver rules very carefully.

A number of these possible steps can cause difficulties, especially since some involve transfers to one child when the parent may want her estate to pass equally to all of her children. Others have tax implications that can undercut their benefit. As a result, we strongly recommend consulting a qualified elder law attorney before embarking on any of these strategies.

Should You Downsize?

Wed, 24 Dec 2025 18:15:41 GMT

New Title

Common Reasons to Downsize Your Home?

Knowing it is time to downsize your home is a very personal subject! With the size of the average home in the U.S. bigger than ever, many owners are finding themselves in living spaces that are more expansive than they want or need. Whatever the reason for buying a bigger home, if you are now thinking of going smaller, you are not alone. As life goes on and your needs change, finding a less demanding home can be ideal. When you're considering downsizing to a smaller home, a condominium, over 55 community or an assisted living community, the questions below will help make the decision easier. Does downsizing your home make sense right now? Downsizing is a question only you can answer.

1. Have the kids moved out of the house?

One of the top reasons why so many people go big with their house purchases is to fit a growing family. But when the kids go away to school or move out of the house to start their lives, it can leave many bedrooms sitting available – rooms that have to be cleaned, spaces that wind up being heated and cooled with no one in it. If you no longer need a four or five-bedroom home, it may be prudent to downsize to something smaller and cheaper. In fact, you may find that a significant amount of money is going out the door to pay for your kid’s college degree and the home has become a financial burden. Money is often a motivating factor for knowing it is time to downsize your house.

2. Do you want to keep costs down?

Expenses are a major reason people downsize their homes. Big houses are expensive to maintain, to insure and costs more in property taxes. Big houses also lead to higher utility bills. With a smaller home, you will save money on your monthly and yearly costs. If you are close to retirement or you are already retired, these savings can make your retirement funds go much, much further. If your house repairs are being done with short term rather than long term goals it might be time to move on.

3. Are you worn out from taking care of your property?
Large houses require a lot of upkeep, as do big yards. Keeping a big home clean and in good working order is a lot of work. Mowing an expansive lawn takes a lot of time, and cutting the grass only gets harder as you get up there in years. Raking up the leaves in the fall is tedious even when you are young and fit. Keeping up with the leaves when you 5/8 are older is tiresome. You may pay for landscaping and cleaning services to take care of all these things, or you may just be resolved to working for hours each week on keeping up your property. Either way, you may be wondering if there is an easier option. A small home takes less effort to keep up, and a townhouse or condo is even less work because the exterior work is handled by the management company. You should get a complete understanding of which housing choice makes the most sense a home or a condo. Have to look at the advantages as well as disadvantages of homes vs. condominiums. If you travel a lot of just don’t have the time necessary to keep up with a home, a condo may be the best move. If on the other hand, you can’t stand the thought of losing control what goes on around you, a home may be the wisest choice. When downsizing these are subjects that should be thought through thoroughly.

4. Do you need to be in a different area?
Your life is changing all the time, which means your priorities and the demands of your day will change too. Sometimes downsizing is necessary to accomplish a primary goal. You may have grandchildren you want to be close to, or another family member or loved one that you either want or need to be nearby. You may have obligations to a group or organization that are hard to meet in your current location. Or you might want to be closer to things you know you are going to need in the future, like healthcare. Selling your current home and moving into something smaller is usually the best way to get close to the things that are important to you. Your willingness to go with a smaller property gives you options.

5. Is the design of your home no longer conducive to your present needs?
One of biggest problems as you age can be mobility. If your home is designed for multiple floor living It may be time to move, even if the monetary change is marginal, having the one floor living, or elevators can be critical.

6. Do you have a lot of equity in your home?

If your house is paid off, or if you have a considerable amount of equity in your property, you may be able to sell your home, buy a smaller house in a cheaper area, and still have a sizable amount of cash left over. Depending on where your home is located, the market and how much the home as appreciated in value, you may find that your house is now worth far more than you imagined. You can find a smaller, less expensive home and add a lot to your retirement – or use the money for whatever you need it for. Let’s face it not having the burden of a mortgage feels good as well! Do, however, make sure you are up to speed on capital gains tax laws for real estate. This is one of the best home ownership perks from a financial standpoint, given the fact you can exclude up to $250,000 in profit if single and $500,000 if married. As great as the tax code is, if you live in a large, expensive home with tons of equity, you could have a good size tax bill.

7. Do you want a change of scenery?
A big, lovely home can start to feel like an anchor. Sure, the home is impressive, but even the most impressive home can start to drag you down if you are ready to move on to a different area. You may want to live next to the ocean, or in the mountains, in a city or out of one. Many times, people want something different, which is perfectly OK. Maybe hot desert air is calling to you, or you want to relax in a small, quiet town. Whatever location you are looking at, chances are if you sell your big home you will have the ability to settle there in a small, modest home. When folks get older in life, they may also find that instead of having one big home they would rather have two smaller properties. Sometimes people don’t want to leave the roots of their hometown, so they will and buy a smaller property in the same location. They will, however, also buy a second smaller place in an area they have vacationed in and simply love. Maybe downsizing sounds appealing to you for this exact reason.

If you believe it is time or will be in the near future to downsize what other considerations should be forefront on your mind?

SELLING AND WHERE TO GO/DOWNSIZING

Like any person Selling there is basic but crucial information required prior to Selling.

How much is your home REALLY worth?
Are there any liens on the property?
Are there title issues that you are not aware of?
What are the tax ramifications of Selling?
Is hiring an experienced realtor, attorney, accountant, and financial advisor advisable?
What are you going to do with years of personal property and who can help you?
Once you have identified these items you have a better idea how much money you will have, how long it might take to be ready to sell and then you move forward to: Where do I go?
Moving in with the kids? A smaller home? A condominium? Assisted Living? Are you going to Rent?
Should I take a mortgage out?
How should I own the property? In a Trust? What kind? ,
do you need a formal living room in your next home?
Look through your current home and look at everything you can get rid of!
Sell items you know you will not be taking with you. A garage or yard sale is one of the best exercises when moving to a smaller home.

Other Options:

What if you decide that downsizing your home is not the best move at present, but you need additional funds. Are there any options to get funds while remaining in my home and possibly downsizing at a later time? There sure are! Take a look at the practical ways to get the equity out of your house. If you are at retirement age, a reverse mortgage is one of the best ways to remain in your house while also having access to your home’s equity.

How To Avoid Taxation On Life Insurance Proceeds

Wed, 24 Dec 2025 18:11:35 GMT

Wouldn't it be nice if you could pass on your entire estate free of taxation? While this scenario is highly unlikely, there are some smart decisions that you can make to avoid future tax consequences. One poor decision that investors seem to make frequently is the naming of "payable to my estate" as the beneficiary of a contractual agreement such as an IRA account, an annuity or a life insurance policy. However, when you name the estate as your beneficiary, you take away the contractual advantage of naming a real person and subject the financial product to the probate process. Leaving items to your estate increases the estate's value, and it could subject your heirs to exceptionally high estate taxes . Here we show you some of the ways that you can reduce the taxes on your estate and ensure that your heirs will benefit from it as much as possible.

Taxation of Life Insurance Death Benefits
One of the benefits of owning life insurance is the ability to generate a large sum of money payable to your heirs in the event of your death. An even greater advantage is the federal income-tax free benefit that life insurance proceeds receive when they are paid to your beneficiary. However, although the proceeds are income-tax free, they may still be included as part of your taxable estate for estate tax purposes.

Section 2042 of the Internal Revenue Code states that the value of life insurance proceeds insuring your life are included in your gross estate if the proceeds are payable: (1) to your estate, either directly or indirectly; or (2) to named beneficiaries, if you possessed any incidents of ownership (we'll discuss this more below) in the policy at the time of your death. In Massachusetts if your gross estate is over $2.0Million you will be required to file an estate tax return, which could cost $5,000-$10,000 and if your net estate is over $2.0Million you will owe estate taxes. An insurance policy of $500,000 or more will get you to $2.0Million very quickly.

Ownership Transfer
For those estates that will owe taxes, whether life insurance proceeds are included as part of the taxable estate depends on the ownership of the policy at the time of the insured's death. If you want your life insurance proceeds to avoid federal taxation, you'll need to transfer ownership of your policy to another person or entity. Here are a few guidelines to remember when considering an ownership transfer:

Choose a competent adult/entity to be the new owner (it may be the policy beneficiary), then call your insurance company for the proper assignment, or transfer of ownership, forms.
New owners must pay the premiums on the policy. However, you can gift up to $19,000 per person in 2025, so the recipient could use some of this gift to pay premiums.
You will give up all rights to make changes to this policy in the future. However, if a child, family member or friend is named the new owner, changes can be made by the new owner at your request.
Because ownership transfer is an irrevocable event, beware of divorce situations when planning to name the new owner.
Obtain a written confirmation from your insurance company as proof of the ownership change.

Life Insurance Trusts
A second way to remove life insurance proceeds from your taxable estate is to create an irrevocable life insurance trust (ILIT). In order to complete an ownership transfer, you cannot be the trustee of the trust and you may not retain any rights to revoke the trust. In this case, the policy is held in trust and you will no longer be considered the owner. Therefore, the proceeds are not included as part of your estate.

Why choose trust ownership rather than transferring ownership to another person? One reason might be that you still wish to maintain some legal control over the policy. Or perhaps you are afraid that an individual owner may fail to pay premiums, whereas in the trust you can ensure that all premiums are paid in a timely manner. If the beneficiaries of the proceeds are minor children or individuals you would prefer to receive their share over time, an ILIT will allow you to name a trusted family member as trustee to handle the money for those individuals. under the terms of the trust document.

IRS Regulations
The IRS has developed rules that help to determine who owns a life insurance policy when an insured person dies. The primary regulation overseeing proper ownership is known in the financial world as the three-year rule , which states that any gifts of life insurance policies made within three years of death are still subject to federal estate tax. This applies to both a transfer of ownership to another individual and the establishment of an ILIT. So, if you die within three years of the transfer, the full amount of the proceeds are included in your estate as though you still owned the policy.

Another IRS regulation will look for any incidents of ownership by the person who transfers the policy. In transferring the policy, the original owner must forfeit any legal rights to change beneficiaries, borrow against the policy, surrender or cancel the policy or select beneficiary payment options. Furthermore, he or she must not pay the premiums to keep the policy in force. These actions are considered to be a part of ownership of the assets and if any of them are carried out, they can negate the tax advantage of transferring them. However, even if a policy transfer meets all of the requirements, some of the transferred assets may still be subject to taxation. If the current cash value of the policy exceeds the $18,000 gift tax exclusion, gift taxes will be assessed and will be due at the time of the original policyholder's death.

Conclusion
Today, it's not uncommon for individuals to be insured under a life insurance policy for $500,000 to $1 million in death benefits . Once you add in the value of your home, your retirement accounts, savings and other belongings, you may be surprised by the size of your estate. If you factor in several more years of growth and the fact that the estate tax exclusion for Massachusetts is $2 million, it is clear that many of us are facing an estate tax issue. A viable solution to this is to maximize your gifting potential and to transfer policy ownership whenever possible at little or no gift-tax cost. As long as you live another three years after the transfer, your estate could save a significant amount of tax.

Should You Downsize Your Home?

Fri, 10 Oct 2025 18:58:39 GMT

1. Have the kids moved out of the house?

2. Do you want to keep costs down?

3. Are you worn out from taking care of your property?

Large houses require a lot of upkeep, as do big yards. Keeping a big home clean and in good working order is a lot of work. Mowing an expansive lawn takes a lot of time, and cutting the grass only gets harder as you get up there in years. Raking up the leaves in the fall is tedious even when you are young and fit. Keeping up with the leaves when you 5/8 are older is tiresome. You may pay for landscaping and cleaning services to take care of all these things, or you may just be resolved to working for hours each week on keeping up your property. Either way, you may be wondering if there is an easier option. A small home takes less effort to keep up, and a townhouse or condo is even less work because the exterior work is handled by the management company. You should get a complete understanding of which housing choice makes the most sense a home or a condo. Have to look at the advantages as well as disadvantages of homes vs. condominiums. If you travel a lot of just don’t have the time necessary to keep up with a home, a condo may be the best move. If on the other hand, you can’t stand the thought of losing control what goes on around you, a home may be the wisest choice. When downsizing these are subjects that should be thought through thoroughly.

4. Do you need to be in a different area?

Your life is changing all the time, which means your priorities and the demands of your day will change too. Sometimes downsizing is necessary to accomplish a primary goal. You may have grandchildren you want to be close to, or another family member or loved one that you either want or need to be nearby. You may have obligations to a group or organization that are hard to meet in your current location. Or you might want to be closer to things you know you are going to need in the future, like healthcare. Selling your current home and moving into something smaller is usually the best way to get close to the things that are important to you. Your willingness to go with a smaller property gives you options.

5. Is the design of your home no longer conducive to your present needs?

One of biggest problems as you age can be mobility. If your home is designed for multiple floor living It may be time to move, even if the monetary change is marginal, having the one floor living, or elevators can be critical.

6. Do you have a lot of equity in your home?

7. Do you want a change of scenery?

A big, lovely home can start to feel like an anchor. Sure, the home is impressive, but even the most impressive home can start to drag you down if you are ready to move on to a different area. You may want to live next to the ocean, or in the mountains, in a city or out of one. Many times people want something different, which is perfectly OK. Maybe hot desert air is calling to you, or you want to relax in a small, quiet town. Whatever location you are looking at, chances are if you sell your big home you will have the ability to settle there in a small, modest home. When folks get older in life, they may also find that instead of having one big home they would rather have two smaller properties. Sometimes people don’t want to leave the roots of their hometown, so they will and buy a smaller property in the same location. They will, however, also buy a second smaller place in an area they have vacationed in and simply love. Maybe downsizing sounds appealing to you for this exact reason.

Other Options :

What if you decide that downsizing your home is not the best move at present, but you need additional funds. Are there any options to get funds while remaining in my home and possibly downsizing later? There sure are! Look at the practical ways to get the equity out of your house. If you are 62 or older, a reverse mortgage is one of the best ways to remain in your house while also having access to your home’s equity.

Tips For Downsizing Your Home

Once you conclude that a smaller home is in your best interests, you’re going to need some of the best tips for downsizing your home! Here are some pointers for your consideration:

Access your current needs – for example, do you need a formal living room in your next home?

Look through your current home and look at everything you can get rid of! Do you have a hoarders’ mentality? This is something you need to change when downsizing.

Think carefully about the design of what you want in your new smaller home.

Measure your current furniture and see what will fit and what won’t in your new place. If you have oversized furniture, consider getting rid of it.

Sell items you know you will not be taking with you. A garage or yard sale is one of the best exercises when moving to a smaller home.

Figure out the storage area in your new home. Sometimes people overestimate going from a large to a smaller home in the area they will have.

Understand the best ways to pack a home for a less stressful move.

CONTRASTING THE ESTATE AND FINANCIAL PLANNING PRIORITIES TO INDIVIDUALS IN THE 30-50 YEAR OLD GROUP VS 62 AND OLDER GROUP.

Fri, 10 Oct 2025 17:31:44 GMT

FOR SINGLE OR MARRIED PEOPLE WITHOUT CHILDREN

· Basic Understanding of Finances, Paying Bills, rearranging debt, attention to credit, start saving money, school loans

· How to buy your first home; How to come up with the down payment

· Under about 401K/IRA vs Roths; start small but start

· When to buy life insurance and what kind

· Explain the need for a Health Care Proxy and HIPAA authorization; Discount need of a Will unless married

· How is the couple sharing financial responsibilities; individual accounts and joint accounts; buying a home with a non-50/50 contribution

· Understand Home Care, Home/Car insurance; Homestead; How to take Title (default of Tenants in Common)

FOR MARRIED COUPLES STARTING OR ALREADY STARTED A FAMILY

· You need a Will because of the Guardianship Clause; Guardian of the Person vs Guardian of the Property. Perhaps time for your first Power of Attorney but definitely Will and Health Care Proxy

· Life Insurance for Peace of Mind (enough money to get the kids through to adulthood); How much insurance; Term or Whole Life or Both

· The Values of a Standby Trust for your children or a combination of your spouse and children

· Financial Buckets; short term; long term longer term

· Tax Planning; Investments beyond IRAs; should you diversion between pre-tax money and post-tax investments; Balance; Time for a financial advisors that emphasizes investment and growth in contrast to life insurance and such products

· Pay attention to your parents; their estate planning; what are your expectations

· 529 Plans or similar programs

· What happens to your estate plan when you have more children?

· Maintain your Estate Plan by periodic reviews with estate planner; If nothing changes, 5 years and as you get over shorter periods;

· Review your Estate Plan when changes occur:

o More children

o Parent’s Disability or Death

o Selling and Buying a new home or investment property;

o Significant increase in Income or Net Worth

o Eventually College planning for children

o Look at your Fiduciaries; are they still appropriate

· Is there a compelling need to coordinate Your Planning with Planning of your Parents or others who you anticipate will be leaving you something upon death.

· Special Need Issues if you have a handicapped child

· You may be needed to be a fiduciary for the Parents; What are your responsibilities, liabilities and personal ethics involved and family harmony

· If your net worth goes up significantly, should you be looking at forming a trust or amending one you already have; do your wishes for your children change as they grow into their teens and are different; do you want to restrict your children’s access to funds until they are older? Divide it so they receive some at different ages; Who do you want as Trustee if you aren’t available? Are the people named in your will as Guardians still appropriate.

Beware of Non-Lawyers Offering Medicaid (MassHealth) Planning Advice or Aiding you in the Application Process

Mon, 21 Jul 2025 16:35:46 GMT

In recent years, a number of non-lawyers have started offering Medicaid (Longterm MassHealth in Massachusetts) planning services to seniors. While using one of these services may be cheaper than hiring a lawyer, the overall costs may be far greater.

The person offering such services may not have any legal knowledge or training. Bad advice can lead seniors to purchase products or take actions that won't help them qualify for Medicaid and may actually make it more difficult. The consequences of taking bad advice can include the denial of benefits, a Medicaid penalty period, or tax liability. Additionally, our experience, having provided services in this area for over 30 years, has shown these non-lawyers have consistently failed:

To diligently and comprehensively identify all the assets of an applicant before applying.
Do not explain adequately, movement of the applicants’ funds over the five year lookback, which is necessary for the applicant to be accepted by Medicaid (MassHealth).
Most do not offer planning advice. In contrast as an attorney, my priority will be to determine what money can be saved, used within the rules and how especially to handle real estate that the applicant has an ownership interest in. Such advice could preserve their home for their spouse and other beneficiaries and save the applicant or their family thousands of dollars, far exceeding the cost of such planning or services for the application that an attorney would charge.
If they do provide advice, it could be bad advice, costing the applicant to lose an eligibility date or eligibility all together. A loss of even one month of eligibility could cost the applicant or their family as much as $20,000.

As a result of problems that have arisen from non-lawyers offering Medicaid planning services, a few states (Florida, Ohio, New Jersey, and Tennessee) have issued regulations or guidelines providing that Medicaid planning by non-lawyers will be considered the unauthorized practice of law. For example, in Florida, a non-lawyer may not render legal advice regarding qualifying for Medicaid benefits, draft a personal service contract, or determine the need for or execute a trust.

Applying for MassHealth is a highly technical and complex process. It is especially difficult for long term care benefits like coverage for nursing homes. A lawyer knowledgeable about Medicaid law in the applicant’s state can help applicants navigate this process. An attorney may be able to help your family find significant financial savings or better care for you or your loved one. This may involve the use of trusts, transfers of assets, purchase of annuities or increased income and resource allowances for the healthy spouse. In Massachusetts particularly, the application process, although conceptually straightforward, is not. Too often a comprehensive application submitted still ends up on an appeal to the Board of Hearings, which is handled by attorneys for the Commonwealth.

How To Choose A Trustee

Mon, 21 Jul 2025 16:01:10 GMT

When I give Seminars on Trusts, they are long, detailed and I think very helpful to people who want to learn about Trusts. But I almost never cover enough information on your different choices for Trustees and the responsibilities of the Trustee. Like any estate documents they are only as good as the fiduciaries named in them. For a trust the fiduciary is called a Trustee.

Trust Administration Basics

A trust is established through the creation of a trust agreement. Within the trust agreement, the Donor or Grantor (creator) of the trust must appoint a Trustee. A Trustee can be any qualified adult, including a friend, family member, or professional (such as an attorney). The Donor can also appoint more than one Trustee, making them Co-Trustees or appoint an entity, such as a bank, to be the Trustee. The Trustee’s overall job is to guard the trust assets and oversee the administration of the trust. Administration the trust, however, involves numerous duties and responsibilities, including:

The Donor or Grantor of the trust creates the trust terms, and those terms dictate how the trust should be administered. The Trustee needs to have a clear understanding of those terms and is legally required to follow them without deviation unless a term is illegal, impossible, or unconscionable. The Trustee is required to understand the trust purpose, as outlined in the trust agreement, and to make decisions with that in mind. A Trustee cannot allow his/her personal opinion to get in the way while administering a trust.
One of the most important aspects of a Trustee’s job is protecting the trust assets. The Trustee is also responsible for investing the trust assets to help the principal grow. Unless the Donor specifically directs the Trustee to make riskier investments, all investments should be low risk and protecting the trust principal should take precedence over growing the trust assets.
The Trustee has a duty to keep trust beneficiaries apprised of trust business and to communicate with beneficiaries as necessary.
The terms of the trust agreement will dictate how the distribution of trust assets should be handled. The Trustee, however, is responsible for making sure those terms are followed and that the beneficiary receives the distribution according to the terms of the trust agreement.
The trust agreement may give the Trustee the authority to make discretionary distributions. If a beneficiary needs funds prior to a scheduled distribution, for example, the Trustee may have the authority to grant that request.
A Trustee should keep detailed records of all trust business, including distributions, payment of trust bills, and time spent administering the trust because those records may be needed to defend the trust, justify trust expenses, or even prevent the Trustee from being held personally liable for mistakes made during the administration of the trust.
Because a trust is a separate legal entity it may be subject to taxation. Whether the trust must file a tax return and/or pay taxes will depend on the type of trust, the value of trust assets, and other variables; however, the Trustee of the trust is responsible for determining if any taxes are due and who or what should be paying them. If the trust has an EIN then the Trustee must also file the appropriate tax returns and pay or redirect any taxes due.
The Trustee must provide an accounting annually to all qualified beneficiaries.

Factors to Consider When You Choose Your Massachusetts Trustee

A Trustee is in a fiduciary position, meaning that the utmost care must be taken to protect the trust assets and that all decisions must be made with the best interests of the beneficiaries in mind. A Trustee is also required to juggle a considerable number of duties and responsibilities while administering the trust. All of this should be taken into consideration when appointing a Trustee to limit the likelihood of costly mistakes being made by the Trustee. Before appointing a friend or family member based solely on your relationship with that person, consider whether that person has the following essential characteristics:

The Trustee you appoint will be responsible for managing and investing the trust assets. Ideally, your Trustee should have a background or education in finance. By the same token your Trustee must understand the trust terms and the state and federal laws that are applicable to the administration of the trust. That makes someone with a legal background an ideal candidate for the position.
Your decision should not be based entirely on the fact that you trust someone; however, being trustworthy is certainly a necessary characteristic for a Trustee given that the Trustee will control the money and assets you use to fund the trust. The Trustee is also responsible for distributing those assets to beneficiaries and paying trust bills, including his/her own fee for acting as the Trustee.
Your Trustee may not agree with the terms of the trust agreement, but that cannot interfere with his/her job as Trustee. A Trustee is legally required to administer the trust and make discretionary decisions with the stated trust purpose in mind and by using the trust terms created by the Donor without regard to the Trustee’s personal opinion.
Consider whether your prospective Trustee will likely create a conflict. If he/she is a member of the family, for instance, will appointing that person as your Trustee create a conflict within the family? Are other family members beneficiaries of the trust, putting the Trustee in a potentially awkward position? What about business dealings that could create a conflict for the Trustee? Whenever possible, avoid appointing a Trustee who will likely create a conflict.
People frequently make the mistake of assuming that someone is willing to serve as the Trustee of the trust they create. With that in mind, be sure to discuss the position with a prospective Trustee before appointing him/her to the position. Along with making sure that a prospective Trustee is willing to serve, take into consideration whether the person will realistically be available to fulfill the duties and responsibilities involved in administering the trust. Consider where the person lives or is likely to live in the future as well as his/her existing family obligations. Finally, consider the person’s age and health when deciding if they would make an ideal candidate for Trustee .
There are many considerations to think about if you have co-trustees. Often co-trustees are a family member/friend and a professional like an attorney or accountant. There are many good reasons to use a professional trustee with or without a co-trustee. These considerations are different for everyone and should be discussed at the time of creating the trust.

National Elder Law Month - May

Fri, 02 May 2025 19:10:44 GMT

1577 Spring Hill Road, Suite 310, Vienna, VA 22182 | 703-942-5711 | naela@naela.org | www.NAELA.org

National Elder Law Month – May

May is National Elder Law Month, a time designated by the National Academy of Elder Law Attorneys (NAELA) which I have been a member for over 25 years, to raise awareness about the legal, health, social, and financial issues faced by older adults and the resources available to support them.

As a member of NAELA — the leading professional association dedicated to improving the quality of legal services provided to older adults and individuals with disabilities — I recognize the valuable public service that Law Office of Dale J. Tamburro provides to the residents of towns and cities that I provide seminar and workshops at. In light of our shared commitment to community support, I would like to invite you my seminars in May and June. These events are designed to educate the public on various topics related to elder law. In May we are focusing on Aging in Place, what to consider if you choose to stay home and alternatively if you decide to downsize what are the most important issues to be concerned with.

National Elder Law Month is the perfect time for us to work together in raising awareness about these important issues and ensuring that older Americans, their families, and caregivers have access to the information they need.

I would love the opportunity to discuss how we can partner on this initiative. Please let me know if you are interested or if you would like more details. I look forward to the possibility of working together to serve our community.

Sincerely,

Dale J. Tamburro

Estate Planning for a Vacation Home

Wed, 30 Apr 2025 16:49:35 GMT

Owning a vacation home is a special privilege—but deciding what happens to it after you’re gone takes careful planning. Many parents hope to keep the home in the family, but doing so can be more complicated than expected.

While meant to be fun and relaxing places to get away from everyday life, vacation houses can cause problems between siblings after their parents pass away. Some siblings may want to use the house, while others may need cash and want to sell. Disagreements can also arise over maintenance costs, taxes, and scheduling use of the home.

One common option is to leave the property to your children in your will. However, if they inherit it equally as joint tenants or tenants in common and one sibling wants out, that sibling can force a sale if the others can’t afford to buy them out.

Before deciding to pass the home on directly, consider holding a family meeting. Ask your children if they all want to keep the property and discuss logistics such as upkeep, taxes, and scheduling. Putting a written agreement in place, including a buyout plan, can help avoid future disputes. The buyout amount could be less than market value, and payments can be made over time; it's really completely up to the family.

Other Options :

Instead of giving the home outright, you could place it in a trust or a Limited Liability Company (LLC) . LLCs are increasingly being used for vacations homes. Using an LLC allows parents to transfer interest in the LLC to their children while still retaining control. Parents can use the annual gift tax exclusion to slowly gift their children additional interest in the LLC each year. The LLC agreement can designate a property manager, provide instructions on maintenance costs and property taxes, and include buyout options. Property in an LLC is also protected from creditors.

Another option is to put property into a Qualified Personal Residence Trust (QPRT), which allows parents to live in the home for a set number of years, after which ownership transfers to the children. The main purpose of a QPRT is to reduce taxes on property, but QPRTs are tricky and must be set up just right or there will be no tax savings.

Choice of Trustee

Fri, 07 Mar 2025 15:58:59 GMT

CHOICE OF TRUSTEE

One of the most difficult and important tasks in preparing a trust for an individual is the selection of a trustee or trustees to manage the trust. Proper management of the trust can make a huge difference in the beneficiary's quality of life for years to come, if not for her entire life. Generally, there are three categories of trustees. Family/friends, Professional Trustees and Professionals serving as trustees (i.e... Attorneys and Accountants).

Here are seven issues I have asked them to consider in making their decision:

Temperament. Personalities to avoid as Trustees include emotional, confrontational, and dogmatic. Family and friends might sound good at first but if there is a potential for conflict of interest or excessive emotions you want to weight the value of retaining family harmony.
Cost. Many people fear using a professional trustee -- trust companies, banks, attorneys, accountants -- due to the cost. Professional trustees usually charge between 1.0 and 1.5% of assets under management, the fee decreasing as the trust funds increase. Over time, these costs can add up, but not nearly as much as the cost of bad management. To put these costs in perspective, they are often the same or less as financial advisors or mutual fund companies charge, and they do not take on any of the fiduciary responsibilities of trustees. Alternatively, many attorneys’ fees will be the same as their hourly fees for any client.
Number. In some case, clients are comfortable simply naming their son or daughter as the sole trustee but are nervous about what that might do to their relationship with other family members. Another trustee (co-trustee) would allow them to share decision-making and responsibility (and blame, perhaps), as well as the workload. It would also provide redundancy if one of the trustees was unavailable for any reason. While it makes a lot of sense to have more than one trustee, more than three starts to get cumbersome. While any single trustee can act for the trust in terms of writing checks and directing investments, they must be carrying out the decisions made by all the trustees. Keeping everyone in the loop and making joint decisions all the time can be difficult if too many people are involved.
Stability . Trusts can last a long time. Will the person you appoint be able to provide the necessary attention to the trust for years or decades? Will they be able to keep up with the often-tedious jobs of paying bills, filing tax returns, and preparing accounts? Since we cannot be certain of the answer to this question if when appointing an institution -- banks get bought and sold, sometimes with ill effect on their trust departments -- the trust must include a mechanism for changing trustees.
Financial acumen. The trustee will need to manage trust investments and spending, taking into consideration the needs and interests of both current and future beneficiaries. Trying to balance their current and future needs can be difficult. They may have $1 million in trust, which seems like a lot of money (perhaps not what it used to be), but to make sure that the fund keeps growing with inflation, they need to limit their trust withdrawals to $30,000 to $40,000 a year. This may seem incongruous with so much money invested, but otherwise the buying power of the trust will diminish and ultimately the trust could fall into a "death spiral" as the beneficiary must dip into larger and larger amounts of trust principal to make ends meet.
Organization. In addition to all of the factors mentioned above, at least one of the trustees needs to be very well organized in order to meet all of the trustee responsibilities -- making distributions, providing account statements to beneficiaries, reviewing investments, filing timely tax returns.
Personal touch. While cost is one reason many clients avoid using professional trustees, another is fear of working with an institution rather than an individual who personally knows the beneficiaries' situations and needs. This can be especially off-putting if the institution has experienced significant turnover in personnel. We've had cases where a parent chose a local banker to serve as trustee only to have that bank bought by a statewide bank which was bought by a regional bank which, ultimately, was bought by a national bank. In the end, the children were dealing with trust officers in another state. This is another reason it's important for all trusts to have a mechanism for changing trustees.

As you can see, neither the choice of trustee nor the chosen person's decision to accept the appointment, should be taken lightly. Each client’s decision will be made based on his unique situation, including the available family members and friends, the likely longevity of the trust, the amount of assets under management, and other factors. We find that the combination of a professional trustee who can take care of the administrative side of the trustee's role and a family member who can bring the personal touch often works best. In a practical sense, the professional trustees are more often and attorney because many of the institutionalized trusteed are either cost prohibited or decline to serve because the trust assets are too small.

Professional Trustees

For large sized trusts (commonly of $1.5 Million in non-real estate holdings), due to the complications of the trustee's role, we strongly urge clients to consider professional trustees such as trust companies, and banks. They are equipped to handle the investment, accounting and tax sides of trust operations and can do so with little risk or difficulty. They should be better equipped to fend off inappropriate requests for distributions and to deal with conflicts of interest. On the other hand, many professional trustees are ill-equipped to deal with the issues presented by beneficiaries with special needs, whether they be eligibility for public benefits or responding to sometimes frequent requests for distributions for unusual purposes. They may be more comfortable simply managing trust assets. Anyone selecting a professional trustee must ask about the prospective trustee's experience with special needs trusts and their methods for responding to these questions.

When a large institution is serving as trustee, an inexperienced trust officer may be assigned to the account. He may have little experience dealing with special needs issues. And the person assigned may change over time as employees come and go and, in the case of many banks, as the identity of the bank itself changes from one to another. This can be extremely frustrating for beneficiaries and their families.

Attorneys as Trustees

For trusts of any significant net worth you can consider using a professional trustee such as an attorney. Attorneys don’t charge as much as institutionalized trustees and will handle much smaller trusts. Attorney also may have some history with the family especially the grantors which may aid the attorney in understanding the grantor’s purpose of having the trust. Attorney’s can also serve as a co-trustee with a family member and allow for the separation of work between trustees.

Family Trustees

Choosing family members and friends as trustees also has advantages and disadvantages. The advantage is that these are people who know and care about the beneficiary and may be able to you the trust funds to provide the greatest benefit for the person with special needs. Many clients are reluctant to give up control to an unknown third party. A further perceived advantage is that family members normally don't charge for their services.

The reality, however, is that trustee fees - typically about 1 percent of trust assets per year, with a minimum for smaller trusts - is very reasonable given the services provided. The risk that a family member trustee will make mistakes or not be able to follow through on the basic trustee responsibilities of prudent investment and accounting are so great that the trustee fee can simply be seen as reasonably-priced insurance. Even the most skilled and responsible family member with the best of intentions may not be able to follow through on all the trustee details given the press of other matters in her life.

In short, to appoint a family member is both a large compliment and placing a large burden on her shoulders.

Co-Trustees

Clearly, there are problems with both family trustees and professional trustees. One solution which we have used with success in our practice is co-trustees - both a professional and family member trustee working together. This can be the best of both worlds. Everyone can rest easily knowing that the basic trust functions will be carried out by the professional trustee. But the family member trustee will be on the scene to make sure that the trust is used to best serve the beneficiary.

So, You've Been Appointed Trustee, Now What?

You have been asked to serve as trustee on the trust of a family member. This is a great honor meaning that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands. However, it is also a great responsibility. You need to go into it with your eyes wide open.

Fiduciary Responsibility. As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust, both the current beneficiaries and any “remaindermen” named to receive trust assets upon the death of those entitled to income or principal now. As a fiduciary, you will be held to a very high standard, meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts.
May I read the trust? The trust document is your instruction manual. It tells you what you should do with the funds or other property you will be entrusted to manage. Make sure you read it and understand it. Ask the drafting attorney any questions you may have.
The Trust’s Terms. Read the trust itself carefully, both now and when any questions arise. The trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries. What are the grantor's goals? Unfortunately, most trusts say little or nothing about their purpose. They give the trustee considerable discretion about how to spend trust funds with little or no guidance. Often the trusts say that the trustee may distribute principal for the benefit of the surviving spouse or children for their "health, education, maintenance and support." Is this a limitation, meaning you cannot pay for a yacht? Or is it a mandate that you pay to support the surviving spouse even if he could work and it means depleting the funds before they pass to the next generation? How are you to balance the needs of current and future beneficiaries? It is important that you ask the grantor while you can. It may even be useful if she can put her intentions in the form of a letter or memorandum addressed to you.
Investment Standards. Your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries. For instance, you may have a current beneficiary who is entitled to income from the trust. He or she would be best off in most cases if you invested the trust funds to generate as much income as possible. However, this may be detrimental to the interest of later beneficiaries who would be happiest if you invested for growth. In addition to balancing the interests of the various beneficiaries, you must consider their future financial needs. Does a trust beneficiary anticipate buying a house or going to school? Will she be depending on the trust income for retirement in 15 years? All these questions need to be considered in determining an investment plan for the trust. Only then can you start considering the propriety of individual investments.
Accounting. One of your jobs as trustee is to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure. In strict trust accounting, you must keep track of and report on principal and income separately.
Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a “grantor” trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes. In many cases, the trust will act as a pass through with the income being taxed to the beneficiary. In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem.
Delegation. While you cannot delegate your responsibility as trustee, you can delegate all the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation. With such professional assistance, the job of trustee need not be difficult. However, you still need to communicate with those you hire and make any discretionary decisions, such as when to make distributions of principal from the trust to one or more beneficiaries.
Distributions. Where you have discretion on whether or not to make distributions to a beneficiary you need to evaluate his current needs, his future needs, his other sources of income, and your responsibilities to other beneficiaries before making a decision. And all these considerations must be made in light of the size of the trust. Often the most important role of a trustee is the ability to say “no” and set limits on the use of the trust assets. This can be difficult when the need for current assistance is readily apparent.
Fees. Will I be compensated? Often family members and friends serve as trustees without compensation. However, if the duties are especially demanding it is not inappropriate for them to be paid something. The question then is how much. Professionals generally charge an annual fee 1 percent of assets in the trust or on an hourly basis or some combination. So, the annual fee for a trust holding $1 million would be $10,000. Often, they charge a higher percentage of smaller trusts and a lower percentage of larger trusts. If you are doing all the work for a trust including investments, distributions, and accounting, it would not be inappropriate to charge a similar fee. However, if you are paying others to perform these functions or are acting as co-trustee with a professional trustee, charging this much may be inappropriate. A typical fee in such a case is a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). In any case, it is important for you to read what the trust says about trustee compensation and discuss the issue with the grantor.

If after asking these questions you feel comfortable serving as trustee, then accept the role. It is an honor to be asked and you will provide a great service to the grantor and beneficiaries.

This can serve as only an introduction to your duties and responsibilities as trustee.

Credit Shelter Trusts For Massachusetts Residents

Fri, 07 Mar 2025 15:52:36 GMT

Credit Shelter Trusts for Massachusetts Residence

Credit shelter trusts are a way to take full advantage of Massachusetts estate tax exemptions. Being a Massachusetts resident we have been very lucky in terms of the appreciation of our real estate and many of my clients don’t realize that they are “millionaires” just by starting to look at their “worth” from their real estate. Massachusetts Estate Tax Laws have two major differences from the Federal Estate Tax Laws.

An Individual who passes away has a $2.0M Exemption before their estate/beneficiaries will owe an estate taxes. The FEDERAL lifetime gift/estate tax exemption is $13.99 million in 2025. The lifetime gift/estate tax exemption is projected to be $7 million in 2026.

Massachusetts does not allow for “portability”. The Federal law does. Portability means that spouses may share in their individual exemption, essentially doubling it. So presently a married couple could exempt up to $28M if one of them died in 2025. To have portability requires that the surviving spouse, elects it by filing a Federal Estate Tax Return for the deceased spouse even though no tax may be due).

In Massachusetts the best way to replicate the benefit of portability is the use by both spouses of separate credit shelter trusts. The way to preserve both spouses' exemptions (so potentially $4.0M vs $2.0M) has been to create a "credit shelter trust" (also called an A/B or bypass trust). Simplistically if a couple is worth $3.0M or $4.0M when the first spouse dies and after the surviving spouse is worth $3.0M or $4.0M then when the second spouse dies (assuming the same net worth) the estate tax would be $99,600 for $3.0M and $182,500 for $4.0M. By using these credit shelter trusts, which are unique to married couples, they will use $4.0M in exemptions instead of only having the benefit of $2.0M when the second spouse passes.

Standard estate tax planning is to split an estate that is over the prevailing state or federal exemption amount between spouses and for each spouse to execute a trust to "shelter" the first exemption amount in the estate of the first spouse to pass away. While the terms of such trusts vary, they generally provide that the trust income will be paid to the surviving spouse and the trust principal will be available at the discretion of the trustee if needed by the surviving spouse. Since the surviving spouse does not control distributions of principal, the trust funds will not be included in her estate at their death and will not be subject to tax. This way, in Massachusetts the couple can protect up to $4 million from estate taxation while still making the entire estate available to the surviving spouse if needed.

The rising federal estate tax exemption means that many older trusts drawn up for married couples contain outdated estate-splitting provisions that may cost them dearly in state or federal taxes, or both. As recently as 2020, if you have retirement funds landing in a trust after your death, it is almost a guarantee the language in your trust will not be up to date unless it was amendment after January 1, 2020. Couples would do well to have their revocable trusts that contain credit shelter provisions reviewed by a competent professional.

If you're interested in learning more about CST, contact our office today !

Which Legal Planning Documents Do You Really Need For An Appropriate Estate Plan?

Fri, 07 Mar 2025 15:45:46 GMT

Which Legal Planning Documents Do You Really Need For an Appropriate Estate Plan?

Whether you are married with children or a single adult, you should have an Estate Plan to protect your assets, loved ones and personal care in the future. What legal documents do you need to have an appropriate Estate Plan? Everyone is different and estate planning is unique to everyone, so it is difficult to generalize. However, most of us need the first four of the fundamental legal documents referred to below. More and more of us need a Trust of some kind but the specifics of why you need a trust and what kind of trust requires more discussion:

Durable Power of Attorney
Health Care Proxy
A Will
HIPAA Release
Living Trust
Credit Shelter Trust Version if you are married and have a net worth in excess of $2,000,000 combined.
Joint Marital Revocable Trust if net worth is less than $2,000,000
Individual Revocable Trust if not married.

(Primarily for Long-term Care Protection you would consider an Income Only Irrevocable Trust )

(Another trust called an Irrevocable Life Insurance Trust(ILIT) is used solely so the death benefits are not included in your Estate for Estate Tax Purposes)

A Durable Power of Attorney

The Durable Power of Attorney is a written document which allows you (the Principal) to designate someone you trust (the Attorney-in-Fact) to make Personal, Business and Financial decisions for you in the event of illness or incapacity. The Durable Power of Attorney allows you to name someone who could take over your personal finances, pay your bills, sign a deed or bill of sale, sign you in or out of a hospital or rehabilitation hospital, make gifts, deal with the IRS, deal with your insurance company or stockbroker, purchase an annuity or engage in Medicaid or long-term care planning on your behalf. A well-drafted Durable Power of Attorney will enable your Attorney-In-Fact to do anything you could as if you were personally present.

A Durable Power of Attorney can be broadly defined, or it can be very specific. It depends upon what one wants or needs.

A Durable Power of Attorney does not necessarily take effect at the time of signing. A Power of Attorney can "spring" into effect only upon the principal's incapacity or disability whether sudden (an accident or a stroke) or gradual (Alzheimer's disease or mental weakness/illness).

A Durable Power of Attorney should be signed while one is in good health. It is preferable to have discussed the Durable Power of Attorney beforehand and make sure the Attorney-In-Fact named in the document agrees to serve and understands what he or she is expected to do. A Durable Power of Attorney needs to be witnessed and be signed in the presence of a Notary Public.

A Durable Power of Attorney has its drawbacks. If it is too old a bank or investment company may not accept it. If it does not reference the particular use that you need it for, its intent may also fail. Even if you have a Durable Power of Attorney, you should have it reviewed every three years to see if it is still sufficient.

Health Care Proxy

A Health Care Proxy is a relatively straightforward legal document that one signs designating another person to make any and all care decision for him/her in the event of illness or incapacity. The person who is appointed is called a health care agent. The agent is authorized to act only if the attending physician determines in writing that you lack the capacity to make or communicate health care decisions. The decision-making authority includes the authority to make decisions about life sustaining treatment.

Again, similar to the Durable Power of Attorney a properly drafted Health Care Proxy will have sufficient detail to cover most if not all consequences. A general announcement naming someone to make all medical decisions for you is not sufficient.

A Will

A Will is a document which, among other things, directs how your property will be disposed of after your death. It is also used to name a Guardian for your minor children in the event of a simultaneous death. The Will also allows you to choose the person or persons who you want to manage your Estate. If you do not have a Will, your property will be distributed according to the Statutory Laws of the Commonwealth, which may or may not be in accord with your wishes. Additionally, virtually anyone, including your creditors, could petition the Probate Court for permission to administer your estate if you have not appointed an Executor through a Will. The use of a Will is part of the Probate Process it DOES NOT AVOID PROBATE.

HIPAA Release

A signed HIPAA release form must be obtained from a patient before their protected health information can be shared with other individuals or organizations, except in the case of routine disclosures for treatment, payment or healthcare operations permitted by the HIPAA Privacy Rule. A HIPPA Release would allow your spouse, children or whomever is named in it to converse with your doctors about your condition. It does not allow them to make any health decisions, those are left to the person named as your Health Care Proxy.

A Living Trust (revocable)

A Living Trust is a document by which a person legally transfers ownership of certain property to another party to be held and managed for his or her benefit or for the benefit of others. The person who establishes The Trust is the Donor.

A Living Trust, so called, is a trust that is established and takes effect while one is alive as opposed to a Testamentary Trust which is established in a will and only comes into being upon death. A Living Trust is often times revocable - meaning - the person who created it can revoke it. It also can be amended from time to time as situations and circumstances change.

By placing property in a Trust, a Trustee is legally responsible for management of the Trust property. A Trust serves to avoid Probate upon the death of the Donor, as the Trust Assets are not in one person's name at the time of death. Unlike a Will, a Living Trust need not be filed with the Registry of Probate.

One similarity of a Will and Trust is that the Trust can provide to whom the Trust assets will go upon the death of the one who created the trust (the Donor). One of the differences between a Will and the Trust is that the Will takes effect when you die. The Living Trust, on the other hand, can be established while you are alive, and the Trustee will hold your assets and manage them during your lifetime. The Executor of your Will can only distribute your assets to your heirs at the time of death. The Trustee can manage the Trust in both instances - while you are alive and following your death.

A Living Trust provides needed flexibility to deal with changes over the years. It provides, as does a Will, a means to provide protection for handicapped, disabled, or mentally challenged family members or loved ones. It can protect a financially irresponsible beneficiary. It allows one to make specific arrangements for children or grandchildren from a prior marriage. A Trust can also be used to avoid or reduce estate taxes.

EXAMPLES:

I am asked for generalities: I don’t like generalities because each person, each couple are unique in my mind and the difference between being a document drafter and someone who provides an estate plan is understanding the individuality of your clients. However, examples sometimes help make things easier to understand.

Anyone over the age of 18 should have a Health Care Proxy. Anyone one who is married should have a Health Care Proxy and Last Will and Testament. Anyone who owns a house or has a retirement account should have a Durable Power of Attorney. It is that simple.

A single person or a widow or widower who have never had a trust will not need a credit shelter trust. They may or may not need a revocable trust or an irrevocable trust or both. This is what having an hour discussion is all about. But…. If you want to have complete unfettered control of what is held in trust, you do NOT want an irrevocable trust, you want a revocable trust. If you want to protect the assets of the trust from creditors or to qualify for MassHealth/Medicaid you do NOT want a revocable trust, you want an irrevocable trust. If you want to control some assets and protect other assets you might want one of each kind of trust. Both kinds of trusts will aid you in the management of the assets if you were disabled and to avoid the probate process if you have passed away.

Again, be careful to not assume what I just described is for you. What you might hear in a seminar or a class, whether with me or another speaker is not designed to define what you need. It is a guide. It is essential that have a one on one with an estate planning attorney to create a plan that is distinctive for you.

For more information on drawing up a Will, Durable Power of Attorney, Health Care Proxy, or Living Trust, contact your local attorney. For more information on The Law Offices of Dale J Tamburro, please visit our web site at www.tamburrolaw.com , email us at Dale@Tamburrolaw.com or call us directly at 617.489.5919.

Don't Let Your Blended Family "Run Wild": Planning for Blended Families

Wed, 27 Nov 2024 15:00:26 GMT

Why Your Unique Family Requires a Customized Estate Plan

The term “blended families” encompasses a diverse range of family dynamics, which makes them so unique. Many important factors are involved, including prior marriages for each spouse, the cause of the end of a previous marriage, children from those marriages, the residence of prior children, the relative wealth of spouses, and more. However, despite the specific circumstances, blended families present unique challenges in estate planning and inheritance arrangements.

I’ve been helping families navigate this process since 1998, and I’ve seen firsthand the intricacies of securing a family’s future, mainly when it includes children from different relationships.

Having a family that includes the children from previous relationships can make things more complex because of competing interests or concerns about how some choices might be perceived. Clients often come to me burdened by stories they have heard about spouses unintentionally disinheriting children from previous marriages or assets becoming entangled following a remarriage. This is a legitimate worry but can be prevented with the right estate planning tools. By preparing the proper estate plan, which often includes carefully drafted trusts, we can safeguard your children’s inheritance, irrespective of future changes in your marital status.

While proper legal documents are important to addressing blended family issues, solutions can only be reached by professionals who seek to understand the emotional impact, not just the legal impact, of these problematic issues. Left unaddressed, the tensions withing blended families can powerfully influence how family members perceive and receive estate plans. As an estate planning attorney, my role often extends beyond legal advising.

In estate planning for blended families, a range of legal tools are utilized to address the unique dynamics and concerns that arise. By employing these legal tools thoughtfully and strategically, estate planning for blended families can effectively address complex family dynamics and provide peace of mind for all involved parties.

Every family is unique, and a one-size-fits-all approach does not work for estate planning in blended families. What works for one family many not work for another. That’s why a customized estate plan tailored to your specific situation is essential. My role is to listen, understand, and craft a plan that aligns with your wishes, ensuring all family members are considered and protected even as families change over time.

If you’re navigating the complexities of a blended family, please contact us. Whether you are a current client with evolving family dynamics or someone considering estate planning for the first time, a consultation or a review of your current plan can be invaluable and set you on the right path. Together, we can create a plan to protect and provide for your unique family situation, ensuring your family is protected and cared for. Remember, it’s not just about drafting documents; it’s about securing your family’s future with care and foresight.

Why You Should Use a Lawyer For Medicaid/MassHealth Planning

Wed, 27 Nov 2024 14:56:26 GMT

Many seniors and their families don’t use a lawyer to plan for long-term care or Medicaid, often because they are afraid of the cost. But an attorney can help you save money in the long run as well as make sure you are getting the best care for your loved one.

Instead of taking steps based on what you have hear from others, doing nothing, or enlisting a non-lawyer referred by a nursing home, you can hire an elder law attorney. Here are a few reasons why you should at least consider the option:

No Conflict of Interest: When a nursing home refers the families of residents to non-lawyers to assist in preparing the Medicaid/MassHealth Application, the preparer has dual loyalties, both to the facility that provides the referrals and to the client applying for benefits. To the extent everyone wants the Medicaid/MassHealth Application to be successful, there’s no conflict of interest. But it is in the nursing homes interest that the resident pay privately for as long as possible before going on Medicaid, while it is in the nursing home residents interest to protect assets for the resident’s care or the resident’s spouse or family. An attorney hired to assist with Medicaid planning and the application has a duty of loyalty only to the client and will do his or her best to achieve the client’s goals.
Saving Money : Nursing homes can cost as much as $15,000 per month in some areas, so it is unusual for legal fees to equal the cost of even one month in a facility. It is not difficult to save this much in long term care and probate costs. And most attorneys will consult with new clients at little or no cost to determine what might be achieved before the client pays a larger fee.
Deep Knowledge & Experience : Professionals who work in any field on a daily basis over many years develop both the depth and breadth of experience and expertise to advise clients on how they might achieve their goals, whether those are maintaining independence and dignity, preserving funds for children and grandchildren, or staying home rather than moving to assisted living or a nursing home. Less experienced advisors, however well intentioned, cannot know what they don’t know.
Malpractices Insurance : While we should expect that every professional we work with will provide outstanding service and representation, sometimes things don’t work out. Fortunately there is a remedy if an attorney makes a mistake because almost all attorneys carry malpractice insurance. This is probably not the case with other advisors in the Medicaid arena.
 Peace of Mind : While it’s possible that when you consult with an elder law attorney, the attorney will advise you that in your situation there is not much you can do to preserve assets or achieve Medicaid eligibility more quickly, the consultation will provide peace of mind that you have not missed an important opportunity. In addition, if obstacles arise during the process, the attorney will be there to work with you to find the optimal solution.

Medicaid rules provide multiple opportunities for nursing home residents to preserve assets for themselves, their spouses and children and grandchildren, especially those with special needs. There are more opportunities for those who plan ahead, but even at the last minute there are almost always still steps available to preserve some assets. It’s always worth checking out whether these are steps you would like to take.

IRS Announces 2025 Gift and Estate Tax Exemptions

Wed, 27 Nov 2024 14:52:36 GMT

Annual Gift Tax Exclusion

Effective January 1, 2025, you will be able to make individual gifts of up to $19,000 in the calendar year (an increase from $18,000 in 2024) tax-free. In other words, giving more than $19,000 to any individual in 2025 means you may have to file a gift tax return. For a married couple filing jointly in 2025, the annual gift tax exclusion will be double that: $38,000.

Estate Tax Exemption

Meanwhile, the IRS has announced that the federal estate tax exemption will jump to $13,990,000 per individual in 2025, up from $13,610,000 million in 2024. Again, married couples’ exemption will be twice that, at $27,980,000 million. Over the course of your lifetime, you would therefore be able to give away up to $13,990,000 (as of 2025) before you owed a federal gift tax.

If the total worth of your estate falls below this amount, your estate will not owe federal estate taxes. (Note that state estate tax is a different matter, which varies depending on where you live.)

The estates of most Americans fall far below the current gift and estate tax thresholds. However, for affluent taxpayers who pass away in 2026 or later, these thresholds are on track to decrease by about half. As a result, a greater number of estates will become taxable. Tax bills could be higher going forward, too.

Note that the IRS will allow you to give away a total of $13,990,000 (as of 2025) during your lifetime before you owe a gift tax.

The End of the Tax Cuts and Jobs Act (TCJA) Is Approaching

At the end of 2025, the Tax Cuts and Jobs Act is slated to sunset unless Congress takes action. The sunsetting of the TCJA will have a significant impact on taxpayers. When the TCJA expires, the federal estate and gift tax exemptions will return to what they were in 2017 (around $5 million, with an adjustment for inflation). To avoid this, lawmakers would have to alter the exclusion limit prior to December 31, 2025.

Is Downsizing the Right Choice for You?

Wed, 02 Oct 2024 14:59:22 GMT

Common Reasons to Downsize Your Home?

Knowing it is time to downsize your home is a very personal subject! With the size of the average home in the U.S. bigger than ever, many owners are finding themselves in living spaces that are more expansive than they want or need. Whatever the reason for buying a bigger home, if you are now thinking of going smaller, you are not alone. As life goes on and your needs change, finding a less demanding home can be ideal. When you're considering downsizing to a smaller home, a condominium, over 55 community or an assisted living community, the questions below will help make the decision easier. Does downsizing your home make sense right now? Downsizing is a question only you can answer.

1. Have the kids moved out of the house?

2. Do you want to keep costs down?

3. Are you worn out from taking care of your property?

4. Do you need to be in a different area?

5. Is the design of your home no longer conducive to your present needs?

6. Do you have a lot of equity in your home?

7. Do you want a change of scenery?

A big, lovely home can start to feel like an anchor. Sure, the home is impressive, but even the most impressive home can start to drag you down if you are ready to move on to a different area. You may want to live next to the ocean, or in the mountains, in a city or out of one. Many times, people want something different, which is perfectly OK. Maybe hot desert air is calling to you, or you want to relax in a small, quiet town. Whatever location you are looking at, chances are if you sell your big home you will have the ability to settle there in a small, modest home. When folks get older in life, they may also find that instead of having one big home they would rather have two smaller properties. Sometimes people don’t want to leave the roots of their hometown, so they will and buy a smaller property in the same location. They will, however, also buy a second smaller place in an area they have vacationed in and simply love. Maybe downsizing sounds appealing to you for this exact reason.

If you believe it is time or will be in the near future to downsize what other considerations should be forefront on your mind?

SELLING AND WHERE TO GO/DOWNSIZING

Like any person Selling there is basic but crucial information required prior to Selling.

· How much is your home REALLY worth?

· Are there any liens on the property?

· Are there title issues that you are not aware of?

· What are the tax ramifications of Selling?

· Is hiring an experienced realtor, attorney, accountant, and financial advisor advisable?

· What are you going to do with years of personal property and who can help you?

· Once you have identified these items you have a better idea how much money you will have, how long it might take to be ready to sell and then you move forward to: Where do I go?

· Moving in with the kids? A smaller home? A condominium? Assisted Living? Are you going to Rent?

· Should I take a mortgage out?

· How should I own the property? In a Trust? What kind?

· do you need a formal living room in your next home?

· Look through your current home and look at everything you can get rid of!

· Sell items you know you will not be taking with you. A garage or yard sale is one of the best exercises when moving to a smaller home.

Buying a Smaller Home pros and cons
Renting pros and cons
Assisted Living Pros and Cons
Buy a Life Estate in your Child’s Home
Build an addition and make improvements to your child’s house.
Set up Personal Care Contracts to Pay your children to help care for you.
Can you live with them?

Do Living Trusts Need To File Their Own Tax Returns?

Fri, 10 Dec 2021 18:46:02 GMT

One of the many advantages of a living trust is it's simplicity at tax time. Before 1981, a revocable living trust had to file its own tax return (Federal Form 1041) and apply for and use its own Taxpayer Identification Number (TIN). In 1981, however, the Internal Revenue Service issued new regulations that not only permit the creator (grantor) of a revocable living trust to use his or her own Social Security number and file Form 1040 only but also specifically encourage them to do so.

Prior to 1981 any trust was required to apply for and use its own TIN and report income on Form 1041. The IRS wisely figured out that while it was processing tens of thousands of Form 1041's for revocable living trusts, it wasn't bringing in any more revenue to the Treasury. These extra 1041's instead were costing the IRS more money to process so it eliminated the requirement.

In order to avoid the requirement for filing Form 1041 or obtaining a new TIN the trust must be what is called a "Grantor" trust. This means the creator of the trust is also the donor of the funds in trust and the recipient of all income generated by the trust. When you think about it this makes perfect sense. You create a revocable living trust, act as sole trustee, transfer your assets into the trust under your own Social Security number, manage the assets in the trust, and receive all income under the trust. Using Form 1040 is the only reasonable thing to do.

Occasionally you may find that a bank or other financial institution tells you that in order to put an asset owned by you that is held in their institution into your trust you must get a new TIN for the trust. The financial institution may tell you that this is "their policy." Not only is this not required, it is clearly wrong. The IRS requirements for tax returns and TIN's for grantor trusts are found in Internal Revenue Code Regulation sections 1.671-4 and 301.6109-1. If you run into this situation, ask the financial institution to look up these regulations so that you can use your own Social Security number.

1.671-4 Method of reporting.

(a) Portion of trust treated as owned by the grantor or another person. Except as otherwise provided in paragraph (b) of this section and § 1.671-5 , items of income, deduction, and credit attributable to any portion of a trust that, under the provisions of subpart E (section 671 and following), part I, subchapter J, chapter 1 of the Internal Revenue Code, is treated as owned by the grantor or another person, are not reported by the trust on Form 1041, “U.S. Income Tax Return for Estates and Trusts,” but are shown on a separate statement to be attached to that form. Section 1.671-5 provides special reporting rules for widely held fixed investment trusts. Section 301.7701-4(e)(2) of this chapter provides guidance regarding the application of the reporting rules in this paragraph (a) to an environmental remediation trust.

(b) A trust all of which is treated as owned by one or more grantors or other persons

(1) In general. In the case of a trust all of which is treated as owned by one or more grantors or other persons, and which is not described in paragraph (b)(6) or (7) of this section, the trustee may, but is not required to, report by one of the methods described in this paragraph (b) rather than by the method described in paragraph (a) of this section. A trustee may not report, however, pursuant to paragraph (b)(2)(i)(A) of this section unless the grantor or other person treated as the owner of the trust provides to the trustee a complete Form W-9 or acceptable substitute Form W-9 signed under penalties of perjury. See section 3406 and the regulations thereunder for the information to include on, and the manner of executing, the Form W-9, depending upon the type of reportable payments made.

(2) A trust all of which is treated as owned by one grantor or by one other person

(i) In general. In the case of a trust all of which is treated as owned by one grantor or one other person, the trustee reporting under this paragraph (b) must either—

(A) Furnish the name and taxpayer identification number (TIN) of the grantor or other person treated as the owner of the trust, and the address of the trust, to all payors during the taxable year, and comply with the additional requirements described in paragraph (b)(2)(ii) of this section; or

(B) Furnish the name, TIN, and address of the trust to all payors during the taxable year, and comply with the additional requirements described in paragraph (b)(2)(iii) of this section.

301.6109-1 Identifying numbers

2) A trust that is treated as owned by one or more persons pursuant to sections 671 through 678

(i) Obtaining a taxpayer identification number

(A) General rule. Unless the exception in paragraph (a)(2)(i)(B) of this section applies, a trust that is treated as owned by one or more persons under sections 671 through 678 must obtain a taxpayer identification number as provided in paragraph (d)(2) of this section.

(B) Exception for a trust all of which is treated as owned by one grantor or one other person and that reports under § 1.671-4(b)(2)(i)(A) of this chapter. A trust that is treated as owned by one grantor or one other person under sections 671 through 678 need not obtain a taxpayer identification number, provided the trust reports pursuant to § 1.671-4(b)(2)(i)(A) of this chapter. The trustee must obtain a taxpayer identification number as provided in paragraph (d)(2) of this section for the first taxable year that the trust is no longer owned by one grantor or one other person or for the first taxable year that the trust does not report pursuant to § 1.671-4(b)(2)(i)(A) of this chapter.

(ii) Obligations of persons who make payments to certain trusts. Any payor that is required to file an information return with respect to payments of income or proceeds to a trust must show the name and taxpayer identification number that the trustee has furnished to the payor on the return. Regardless of whether the trustee furnishes to the payor the name and taxpayer identification number of the grantor or other person treated as an owner of the trust, or the name and taxpayer identification number of the trust, the payor must furnish a statement to recipients to the trustee of the trust, rather than to the grantor or other person treated as the owner of the trust. Under these circumstances, the payor satisfies the obligation to show the name and taxpayer identification number of the payee on the information return and to furnish a statement to recipients to the person whose taxpayer identification number is required to be shown on the form.

Contact us in Belmont, Massachusetts, at (617) 489-5919 for comprehensive estate planning from attorneys with experience.

Make Reviewing Your Estate Plan One of Your New Year's Resolutions

Wed, 01 Dec 2021 08:19:08 GMT

Estate planning is all about five essential documents.

The beginning of a new year is a good time to take a look at your estate plan to make sure it is up to date. Less than half of people actually have any estate planning documents in place and many of those people may have outdated documents. Documents that were created when your children were born may need updating 20, 30, or 40 years later, after your family and financial situation have changed entirely.

Estate planning is all about five essential documents. Here they are in order of importance:

1. The Durable Power of Attorney

The most important estate planning instrument for taking care of you and your family during life, as opposed to after death, is the durable power of attorney. This appoints one or more people you trust to step in and handle your finances and legal matters in the event of your incapacity, whether through illness, dementia, or an accident, and whether the incapacity is temporary or permanent. In the absence of a durable power of attorney, family members often must resort to going to court to be appointed conservator. This causes delay and expensive and unnecessary legal fees. It can also cause infighting by family members since you have not chosen who should step in.

While the concept of the durable power of attorney is simple – I appoint you as my agent for financial and legal matters in the event of incapacity – the devil, as always, is in the details. You have to make decisions about how many agents to appoint, whether to have alternates, whether to allow gifting, when the power of attorney should take effect, and whether to grant trust powers. Your attorney can help you with these details.

2. Health Care Proxy

Like the durable power of attorney, a health care agent steps in for you to make health care decisions when and if you become incapacitated. Unlike a durable power of attorney, it only takes effect when a doctor determines that you are unable to make decisions yourself and you can only appoint one individual to serve at a time. This is so that there will be a single point-person in dealing with medical professionals and no possibility of disagreement or stalemate between co-health care agents. You can and should name one or more alternates to the principal agent.

The main problem with health care proxies is that agents often have no idea or only a vague idea of what decision the patient would make in a particular circumstance. This can be addressed in one or more of these ways: a medical directive, a conversation between the potential patient and the agent, and a number of available workbooks (see below). A general medical directive can be included with the health care proxy that says either (1) pull the plug if I’m in a vegetative state or irreversible coma, (2) balance the potential benefit and discomfort of any proposed treatment, or (3) do whatever you can to keep me alive.

Part of the problem with giving guidance to one’s agent is that it’s hard to predict situations that may occur and treatments that may be available. A number of organizations have developed workbooks to provide more detailed guidance than simply “keep me alive at all costs” or “do nothing.” They include: The Consumer’s Toolkit from the American Bar Association and Five Wishes from Aging with Dignity.

3. HIPAA Release

In addition to a health care proxy, everyone needs a HIPAA release. The HIPAA law bars medical practitioners from releasing medical information to anyone, even to the spouse of a patient, without a release. You may well ask why a heath care proxy isn’t sufficient. There are a few answers: First, the health care proxy is “springing” in that it doesn’t get activated until or unless the patient is declared incapacitated. Second, while the health care proxy may only name one person at a time, you may well want a much broader group of people to communicate with medical providers. The agent may not always be available or may not be the first person on the scene.

All too often we have seen medical providers hide behind HIPAA to avoid having to deal with family members, sometimes to great harm to the patient. Especially in emergency situations, family members often have vital information about the patient, whether it’s the medications he is taking, allergies he may have, or his usual physical and mental health. HIPAA does not say that medical personnel cannot listen to this information, but it can be misconstrued in that fashion. It’s best to eliminate the whole issue by having a HIPAA release signed and available in case it’s ever needed.

4. Your Will

Your will says who will get your stuff when you die and who will be in charge of paying your bills, filing your tax returns, gathering your stuff and distributing it according to your instructions.

But here’s the irony: although the will gets all the recognition and there’s a whole set of laws governing the so-called “probate” process, these days most assets pass outside of probate. What the will says does not apply in many situations, including: joint accounts that pass to the other joint owners, retirement plans and life insurance policies that go to designated beneficiaries, and property in trust that passes to the beneficiaries named in the trust document. Only what you own in your own name alone passes under the will. In addition, while the will requires a lot of formality – two witnesses and a notary all signing at the same time – these other forms of passing on property usually require only the signature of the owner, or sometimes simply filling out a form online.

That said, wills are important in terms of distributing your tangible personal property – stuff you can touch, such as furniture, jewelry, tools, clothing, boats, and cars. Your will appoints your executor or personal representative who is in charge of carrying out your wishes. This can be very important in avoiding squabbling among children. And your will can be used to appoint guardians for minor children. A will permits you to make charitable or other specific bequests. Finally your will can serve as a failsafe in case other means of passing on property fail.

5. Revocable Trust

The documents listed above may be enough, but you may also want a revocable trust, sometimes called a "living" trust. A trust is a construct under which one or more people, the trustees, manage property or investments for the benefit of one or more people, the beneficiaries. In a revocable trust, typically at the start the same person acts as the creator of the trust, the grantor or donor, as trustee and as beneficiary. Not much changes in their lives after they set up the trust. But it avoids probate by naming successor beneficiaries after the initial beneficiary passes away. While probate is not the worst thing that can happen to people, avoiding it can save heirs time and trouble.

But more importantly, a trust is a terrific tool for intervening in the event of incapacity. Financial institutions that are resistant to accepting durable powers of attorney appear to be more comfortable with trusts when a successor trustee is named. But it works even better when a parent names one or more adult children as co-trustees. The parent then does not give up any rights or autonomy, but permits the child to begin participating in financial management. Even if the child does nothing, he or she can view accounts and step in immediately if a problem arises. This can be especially important in the event of dementia or scams. Seniors are the primary victims of scams and having a trusted family member with access to accounts can help identify scams and permit intervention to limit their effect.

In addition to probate avoidance and incapacity protection, trusts are infinitely flexible in terms of how they are drafted. They can state any number of specifics on who receives property when, for instance, permitting its distribution over time to children and grandchildren. The options and opportunities for creativity are limitless

As you can see, most of these documents are about life not death. Of course, they’re still about planning for an unwanted event – incapacity of some sort. It’s like insurance to make sure that you and your family are taken care of if an unfortunate accident occurs.

Contact us in Belmont, Massachusetts, at (617) 489-5919 for comprehensive estate planning from attorneys with experience.

How to Increase the Chance That Your Power of Attorney Will Be Honored

Mon, 01 Nov 2021 07:19:08 GMT

Q. I have heard friends complain that their parent’s financial power of attorney was not honored by their bank. Is there a way to avoid this?

Unfortunately, we hear that complaint from time to time. While there may be no way to draft a power of attorney that completely eliminate the risk that it will not be honored at the time of need, here is my short list of steps you can take to minimize the risk:

Sign the Bank’s Own Forms: most banks and other financial institutions have their own, short form Power of Attorney with which they are familiar. While the bank’s own forms are more limited and are usually targeted to specific accounts-- in addition to your attorney-drafted document-- usually eliminates the risk that your designated agent will have problems at that bank down the road.
Include Hold Harmless Provisions in your DPOA: financial custodians are concerned about their exposure if they mistakenly rely upon a durable Power of Attorney (“DPOA”) that appears valid on its face. It sometimes helps if your DPOA includes specific language that a bank or other custodian will be held harmless if it relies, in good faith, upon a DPOA presented to it.
Fully Describe Real Property: title companies are sometimes reluctant to honor a DPOA that refers, generally, to “all real property”. Their comfort increases dramatically if the DPOA recites, specifically, the full legal description of each piece of real property covered by the DPOA.
Preserve Evidence of Capacity: if you anticipate any question down the road as to whether an elderly signer knew what he was signing at the time the DPOA was executed, consider asking him to secure a letter from his doctor that the elder has full capacity to sign such documents. That letter can then be kept on file to be shown to any financial institution should such concern later arise.
Keep the DPOA Current: third parties are often concerned if a DPOA has been signed so long ago so that it is “stale” in their eyes. I recommend re-executing a financial DPOA at least every 3 to 5 years and, if possible, annually.
Offer a 4305 affidavit: custodians are sometimes concerned that the DPOA may have previously been revoked. To allay that concern, the agent can submit an affidavit to the custodian, made pursuant to section 4305 of the Probate Code, that the DPOA has not been revoked. Once completed, that affidavit becomes conclusive proof of non-revocation.
Anticipate Language That the Custodian May Prefer: if the DPOA is being created to be used at a specific bank or title company, ask whether it prefers specific language in the DPOA and, if so, incorporate same in your document.
Legal Proceedings to Enforce Acceptance: as a last resort, consider a lawsuit. The law provides that a third party who refuses to honor a DPOA, after being provided a 4305 affidavit, may be liable for the petitioner’s attorney’s fees incurred in the court proceeding. Bringing this to the custodian’s attention often generates the desired compliance.

Contact us in Belmont, Massachusetts, at (617) 489-5919 for comprehensive estate planning from attorneys with experience.

Essential Questions You Have to Ask Your Aging Parents

Fri, 01 Oct 2021 17:48:46 GMT

Think the birds and bees is the most awkward chat you'll ever have with Mom and Dad? Think again. Adulthood brings other uncomfortable conversations: wills, long-term care, and end-of-life issues. Here's how to these handle delicate subjects with care.

The Big Question: Do You Have a Will?

A will determines the future of not only money and property but also pets and even token mementos. When someone dies without a will, her estate is divided in probate court, where a judge decides who gets the assets. This can cost thousands of dollars and take months. Even if the deceased told a loved one her wishes before she died, a verbal statement won't hold up in court. The judge will base his ruling on laws and legal precedents of the state."

How to Bring It Up

"I don't want to upset you, but if something happened to you, I would want to know that your wishes were being honored. Do you have a will?"

While You're at It, Ask…

Have you consulted a reliable financial planner who can help anticipate your needs as you age?
Will you give me or another trusted person power of attorney over your financial affairs in case there's a time you can't handle them yourself?
Do you have an authorized user on your bank and investment accounts?
Do you need help handling some of your financial ponsibilities, like double-checking your credit-card statements and reviewing your bills?
Are you willing to have a joint checking account with me so I can help you pay bills if necessary?

On Their Living Situation…

The Big Question: Have You Thought About Long-Term-Care Insurance?

Most long-term assisted-living or nursing-home expenses are not covered by Medicare.. And long-term care, which includes anything from extended home assistance to a nursing home, is very costly.

How to Bring It Up

"I read about how much assisted living can cost, and I was stunned. I would want you to have the best care if it ever came to that. Have you looked into insurance?"

While You're at It, Ask…

Do you want to live in your house for as long as possible? Are there things we need to do to your house so it's safe and comfortable for you as you age? Can we make some of those changes now?
Are you willing to move into a smaller place that's easier to manage, like a condo? When?
Have either of you thought about whether you would want to stay in the house if you were alone?
Would you be willing to hire someone to help you at home if you can't do it on your own anymore?
Would you consider moving in with me or one of my siblings if we all agree that you need help with your personal care or aren't safe at home alone anymore? How do you feel about moving into an assisted-living facility?
Can I help you scout out quality assisted-living facilities and nursing homes now, so we know what's available and what you would prefer in case you need one in the future?

On Their Health…

The Big Question: Do You Have Advance Health-Care Directives?

Advance health-care directives can include a living will (which gives written instructions on the degree of life-sustaining measures that should be taken), a health proxy in Massachusetts by Statute (which appoints another party to make health-related decisions in the event that a person is unable to do so), and a HIPPA release (a document that allows another person access to someone's medical records, which is useful for insurance claims). It's difficult to make decisions in a crisis, and memories about conversations differ.

How to Bring It Up

"If you were ever on life support, I would be really torn up and not in the best frame of mind to make a decision. I know we talked about how you feel, but I think it would give both of us some relief if you put it in writing."

While You're at It, Ask…

Will you consider giving your doctor permission to talk to us in case we have questions about your medical treatment?
Can one of us accompany you to some doctor's appointments? We recognize your right to privacy, but maybe we can help keep track of everything your doctor says at your visit.
How do you feel about being kept alive with ventilators, feeding tubes, or other interventions? And under what circumstances would you want that? Do we all understand what these terms mean?
If you have advance-care planning documents, where do you keep them? Have you shared them with any family members, doctors, or clergy.