Beginning in 2018, a married couple can pass away with an estate of just over $22 Million without paying any federal estate tax.  That means for more than 99 percent of Americans there is no threat of a federal estate tax burden.  Clients are already asking: with no estate tax, do you still need a trust? While trusts can be used to shelter assets from the estate tax, trusts have many other valuable estate planning uses.
​
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a "trustee," holds legal title to property for another person, called a "beneficiary." The following are some of the benefits of trusts.

• Avoiding Probate. One of the biggest benefits of a trust is avoiding the probate process. Probate is the process of administering and settling an estate after someone dies. While most counties in Massachusetts now accept electronic filing which speeds up the process, it still can be a costly and time-consuming process. Even with small estates, beneficiaries may not have access to estate funds until a will is filed and an Personal Representative appointed. A trust gives beneficiaries immediate access to trust funds. If you have property in multiple jurisdictions, a trust can be especially beneficial in avoiding more than one probate proceeding in each state. Also, probate is a public process—anyone can access court records--while assets distributed in a trust are private.
• Minimizing the Massachusetts Estate Tax. While the federal estate tax exemption protects just over $22 million in assets, anyone in Massachusetts passing away with an estate of more than $1 Million (which threshold can be reduced by certain lifetime gifts) not passing to a surviving spouse or charity can expect to pay an estate tax to Massachusetts.  Through trust planning, a married couple can essentially double this, allowing them to pass $2 Million to children or other beneficiaries without paying an estate tax, saving nearly $100,000 in estate taxes.
• Protection for Disability. Another benefit of a trust is to provide protection if you become disabled. If you become incapacitated, the trustee can manage your finances without the need to go to court and get a conservatorship or guardianship.
• Control. A trust allows you to specifically detail how you want to distribute your assets. For example, you can choose to dole out benefits in small amounts if you don't want your beneficiaries to receive all your assets at one time (particular useful when beneficiaries are of a young age). You can also direct how funds in the trust can be spent on a beneficiary. If you have property, the trust can specify who has the right to use the property, whether it can be sold, and how proceeds should be distributed.
• Protection from Creditors. Certain types of trusts can be set up to protect beneficiaries from creditors. A properly structured trust can create roadblocks against creditors from reaching trust funds. This can be helpful if, for example, your intended beneficiary divorces or is the target of a lawsuit.
• Providing for a Child with Special Needs. If you have a child with special needs, a trust is particularly important. A third party special needs trust, or supplemental needs trust, allows a beneficiary with special needs to receive inheritances, gifts, or other funds without losing his or eligibility for government programs.

Trusts are just one possible part of an estate plan. Contact us to schedule a meeting to find out if a trust is right for you.

 
If your child has reached the teenage years, you may already feel as though you are losing control of her life. This is legally true once your child reaches the age of 18 because then the state considers your child to be an adult with the legal right to govern his or her own life.
 
Up until your child reaches 18, you are absolutely entitled to access your child’s medical records and to make decisions regarding the course of his treatment. And, your child’s financial affairs are your financial affairs. This changes once your child reaches the age of 18 because your now-adult child is legally entitled to his privacy and you no longer have the same level of access to or authority over his financial, educational and medical information. As long as all is well, this can be fine. However, it’s important to plan for the unexpected and for your child to set up an estate plan that at least includes the following three crucial components:
 
1. Health Care Proxy and HIPAA Release
 
Under the Health Insurance Portability and Accountability Act, or HIPAA, once your child turns 18, the child's health records are now between the child and his or her health care provider. The HIPAA laws prevent you from even getting medical updates in the event your child is unable to communicate his or her wishes to have you involved. Without a HIPAA release, you may have many obstacles before receiving critically needed information, including whether your adult child has even been admitted to a particular medical facility.
 
Should your child suffer a medical crisis resulting in the child's inability to communicate for him or herself, doctors and other medical professionals may refuse to speak with you and allow you to make medical decisions for your child. You may be forced to hire an attorney to petition to have you appointed as your child’s legal guardian by a court. At this time of crisis, your primary concern is to ensure your child is taken care of and you do not need the additional burden of court proceedings and associated legal costs. A health care proxy and a HIPAA release would enable your child to designate you or another trusted person to make medical decisions in the event your child is unable to convey his or her wishes.
 
2. Durable Power of Attorney
 
Like medical information, your 18-year-old child’s finances are also private.  If your child becomes incapacitated, without a durable power of attorney you cannot access the child's bank accounts or credit cards to make sure bills are being paid. If you needed to access financial accounts in order to manage or resolve any problem, you may be forced to seek the court’s appointment as conservator of your child.
 
Absent a crisis, a power of attorney can also be helpful in issues that may arise when your child is away at college or traveling. For example, if your son is traveling and an issue comes up where he cannot access his accounts, a durable power of attorney would give you or another trusted person the authority to manage the issue. An alternative may be to encourage your child to consider a joint account with you.  However, this is rarely recommended because of the unintended consequences for taxes, financial aid applications, creditor issues, etc.
 
3. Will
 
Your child owns any funds given to him or her as a minor or that he or she may have earned. In the catastrophic event that your child predeceases you, these assets may have to be probated and will pass to your child’s heirs at law, which in most states would be the parents. If you have created an estate plan that reduces your estate for estate tax or asset protections purposes, the receipt of those assets could frustrate your estate planning goals. In addition, your child may wish to leave some tangible property and financial assets to other family members or to charity.
 
While a will may be less important than the health care proxy, HIPAA release or durable power of attorney, ensuring that your child has all three components of an estate plan can prevent you, as a parent, from having to go to court to obtain legal authority to make time-sensitive medical or financial decisions for your child.
 
If you have a child (or grandchild) who is approaching adulthood, talk to us about having the child execute these three crucial documents.

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for MassHealth.
 
A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.
 
One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for MassHealth, a prepaid funeral contract can be a way to spend down your assets.
 
MassHealth applicants must spend down their available assets until they reach the qualifying level (which for a single person can be as low as $2,000). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won't affect your eligibility. In order for a prepaid funeral contract to be exempt from MassHealth asset rules, the contract must be irrevocable. That means you can't change it or cancel it once it is signed.
 
Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.

Massachusetts law allows a Last Will and Testament to refer to a separate listing of tangible personal property with designated beneficiaries of such property.  Previously, it was not uncommon for Wills to contain page after page of instructions relative to household furnishings, jewelry and other items of tangible personal property.  As a result, if you wanted to change just one bequest, a codicil to your Will would be required with the formality (and cost) of executing it in the presence of two witnesses as well as a notary public.  Now, instead of changing your entire Will you simply update the memorandum or listing whenever you want to make a change.  Here are some tips in creating such a document:

• While formalities are relaxed, be certain to follow the requirements.  The memorandum should be printed, signed and dated.  Already we have had cases where the memorandum was simply a listing in a digital document found on the person’s computer and since it was never signed it was not enforceable.
• Integrate the memorandum with your Will.  Your Will should instruct your Personal Representative to follow the instructions in the memorandum.  The memorandum should be stored alongside your original Will so that your Personal Representative can locate it.
• Be specific.  You may know exactly what you are describing in the Will, but would someone else know what you are referring to?  Include model numbers of items and perhaps include digital photographs in the memorandum (especially helpful when describing particular items of jewelry).
• Don’t describe things by where they are located in your home:  A bequest of “all the furniture in the living room to my daughter” isn’t specific enough.  Plus if you move, or if items in the house are moved around after your death this generic description could prove inadequate.
• While these memorandums are helpful, lifetime gifts should still be considered.  When you think about how your assets are divided after your death – bank accounts, investment, real estate – these are all relatively easy to divide into equal shares for your beneficiaries.  A household of furnishings and personal belongings can not only be difficult to divide equally, but can also cause conflict among beneficiaries.  Items of significant sentimental value that cannot be divided should still be candidates for lifetime giving.  In addition, when you give these items away during life you can tell the beneficiary the story and history of the item at the same time.
• While this can be an enormous task, even a partial list can reduce conflict.  When you think about all the items in your house that have meaning and should be designated to go to certain people it may seem like a daunting task to capture such listing in writing.  The ease in which this memorandum can be updated means that you can tackle just a piece of this task at a time, print, sign, date, and know that you can update the memorandum when you have time.  We have seen partially completed lists that were never signed, probably because the person didn’t consider it done, and if they had simply signed and dated it at least a portion of the property division would have been simplified.
• Don’t assume that “they’ll figure it out.”  Beneficiaries place different values on items and the division of property in someone’s house after they pass away can get contentious.  Twice in my career we have had Personal Representatives hire constables to be at the property on the day of division to ensure a peaceful division of property.  Every time you can replace an argument over who should get what with a “mom and dad said I get this and you get that” it will help ensure the division of your property doesn’t negatively impact the relationship between beneficiaries after you pass away.

 
 
When complete, have your attorney review the memorandum.  Attorneys are trained to spot ambiguities and vague wording and a quick review of your memorandum might help spot areas where you need to be more specific.