If you are lucky enough to own a vacation home, then you need to figure out what will happen to it after you are gone. Many parents hope to keep vacation homes in the family, but guaranteeing that can be tricky.

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. There may be disputes over who pays maintenance costs or when different families can use the house.

One option for passing on a vacation home is to leave it to your children in your will. The problem with this is that if the children own the house equally as joint tenants or tenants in common and one sibling wants to sell, that sibling can demand to be bought out. If the other siblings can't come up with the money to buy out the sibling, the sibling who wants out can force the sale of the house.

Before you decide to leave your vacation house to your children outright, you should have a family meeting to find out whether all the children actually want the house. If they do, you should discuss who will be responsible for maintenance and property taxes, and who has the right to use the property, among other issues. Putting a plan in writing can help prevent or resolve disputes down the road. The plan can also include a buyout option if any heirs decide they do not want to own the property. The buyout price can be less than if the property is sold to a third party and payment terms can extend over several years.

Rather than giving the property to your children outright, you can also put it in a trust or a Limited Liability Company (LLC). LLCs have become a popular estate planning tool for vacation 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). A QPRT allows the parents to live in the home for a certain number of years and at the end of the term, the children own the home. 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. 
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To determine the best way to protect your vacation home, contact us today.

​The new tax law makes it harder to claim a tax deduction for charitable contributions. While charitable giving should not be only about getting a tax break, if you want to reap a tax benefit from your contributions, there are a couple of options. 
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The Tax Cut and Jobs Act, enacted in December 2017, nearly doubled the standard deduction to $12,000 for individuals and $24,000 for couples. This means that if your charitable contributions along with any other itemized deductions are less than $12,000 a year, the standard deduction will lower your tax bill more than itemizing your deductions. For most people, the standard deduction will be the better option. 

If you still want to maximize the tax benefits of charitable giving and you have the financial means, one option is to double your charitable donations in one year and then skip the donation the following year. For example, instead of giving $10,000 a year to charity, you could give $20,000 every other year and itemize your deductions in that year. 

Another way to concentrate charitable giving is to establish a donor-advised fund (DAF) through a public charity. A DAF allows you to contribute several years worth of charitable donations to the fund and receive the tax benefit immediately. The money is placed in an account where it can be invested and grow tax-free. You can then make donations to charities from the account at any time, in addition to adding to the account. As with any investment, you need to do research before establishing a DAF. Make sure you understand the fees involved and whether there are any limits on the charitable contributions you can make. You should consult with your financial advisor before taking any steps. 

If you are taking required minimum distributions from an IRA, another option is to donate those distributions directly to charity through a qualified charitable donation. The distributions won't be included in your gross income, which means lower taxes overall. The donation must be made directly from the IRA to the charity and different IRAs have different rules about how to make the distributions. 

If you are paying for your own insurance, you may think you do not need to sign up for Medicare when you turn 65. However, not signing up for Medicare Part B right away can cost you down the road. 

You can first sign up for Medicare during your Initial Enrollment Period, which is the seven-month period that includes the three months before the month you become eligible (usually age 65), the month you are eligible and three months after the month you become eligible. If you do not sign up for Part B right away, you will be subject to a penalty. Your Medicare Part B premium may go up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it. In addition, you will have to wait for the general enrollment period to enroll. The general enrollment period usually runs between January 1 and March 31 of each year.

There are exceptions to the penalty if you have insurance through an employer or through your spouse's employer, but there is no exception for private insurance. The health insurance must be from an employer where you or your spouse actively works, and even then, if the employer has fewer than 20 employees, you will likely have to sign up for Part B. 

If you don't have an employer or union group health insurance plan, or that plan is secondary to Medicare, it is extremely important to sign up for Medicare Part B during your initial enrollment period. Note that COBRA coverage does not count as a health insurance plan for Medicare purposes. Neither does retiree coverage or VA benefits.
For a New York Times column about a man with private insurance who didn’t realize he needed to sign up for Part B, click here.  
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For more information about Medicare and turning 65, click here.

A recent case involving basketball star Caldwell Jones demonstrates the danger in having only one spouse's name on a reverse mortgage. A federal appeals court has ruled that an insurance company may foreclose on a reverse mortgage after the death of the borrower, Mr. Jones, even though Mr. Jones’ widow is still living in the house. While there are protections in place for non-borrowing spouses, many spouses are still facing foreclosure and eviction.

A reverse mortgage allows homeowners to use the equity in their home to take out a loan, but borrowers must be 62 years or older to qualify for this type of mortgage. If one spouse is under age 62, the younger spouse has to be left off the loan in order for the couple to qualify for a reverse mortgage. Some lenders have actually encouraged couples to put only the older spouse on the mortgage because the couple could borrow more money that way. But couples often did this without realizing the potentially catastrophic implications. If only one spouse's name was on the mortgage and that spouse died, the surviving spouse would be required to either repay the loan in full or face eviction.

In order to protect non-borrowing spouses, the federal government revised its guidelines for reverse mortgages taken out after August 4, 2014 to allow spouses to stay in the house as long as they meet certain criteria, including proving ownership within 90 days of the borrowers death. In 2015, the federal government allowed lenders to defer foreclosure on a widow or widower and assign the mortgage to the federal government. Advocacy groups looking at reverse mortgage foreclosures have found that despite these new regulations, lenders are still foreclosing on non-borrowing spouses. Of the 591 non-borrowing spouses who have sought help to avoid foreclosure, only 317 received assistance.

These regulations did not help Mr. Jones' wife, Vanessa. Mr. Jones, who blocked more than 2,200 shots during his 17-year professional basketball career, obtained a reverse mortgage in 2014 on the Georgia home he lived in with his wife. The contract defined the "borrower" to be "Caldwell Jones, Jr., a married man." Ms. Jones did not put her name on the reverse mortgage because she was under age 62 at the time of the mortgage. Mr. Jones died later that year, and when Ms. Jones did not repay the loan, the insurer began foreclosure proceedings.

Ms. Jones sued the insurer in federal court to prevent the foreclosure, arguing that federal law prohibited the insurer from foreclosing on the house while she lived in it. Under a provision in federal law, the federal government "may not insure" a reverse mortgage unless the "homeowner" does not have to repay the loan until the homeowner either dies or sells the mortgaged property and defines "homeowner" to include the borrower’s spouse.

On appeal, the 11th Circuit Court of Appeals (Estate of Caldwell Jones, Jr. v. Live Well Financial (U.S. Ct. App., 11th Cir., No. 17-14677, Sept. 5, 2018)) ruled that the federal law in question only covers what the federal government can insure and does not govern the insurer's right to foreclose. The court agrees with Ms. Jones that the law is intended to safeguard widows and implies that the federal government should not have insured the loan in the first place, but finds that federal law does not cover the insurer's private right to demand immediate payment and pursue foreclosure.
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When purchasing a reverse mortgage, it is always safer to put both spouse's names on the mortgage. If one spouse is underage when the mortgage is originally taken out, that spouse can be added to the mortgage when he or she reaches age 65. If you have a reverse mortgage with only one spouse on it, contact us to find out the best way to protect the non-borrowing spouse. 

 
The older you get, the harder it is to qualify for long-term care insurance. If you are interested in buying this insurance, it is better to act sooner rather than later.
 
Many people put off purchasing long-term care insurance until they need it, but by then, it may be too late. Not only do premiums increase as you age, you also may not even qualify for insurance due to your health. The older you are, the more likely you are to have a pre-existing health condition that will disqualify you from getting long-term care insurance.
 
According to a recent study by the American Association for Long-Term Care Insurance, 44 percent of applicants who were age 70 or older had their applications denied due to health reasons. And those are the applicants who completed applications. Insurance agents frequently discourage unhealthy applicants from applying in the first place.
 
In contrast to older applicants, only 22 percent of applicants who are between 50 and 59 years old and 30 percent of applicants between 60 and 69 years old had their applications declined. Generally, the best (and cheapest) time to buy long-term care insurance is when you are in your 50s.
 
Long-term care insurance is not the best option for everyone, but if you are thinking about it, don't put off the purchase until it is too late. To find out if a long-term care insurance policy fits into your long-term care plan, contact us today.

According to court documents, legendary singer Aretha Franklin did not have a will when she died, opening up her estate to public scrutiny and potential problems. Failing to create an estate plan can cause lots of headaches for heirs, in addition to unnecessary costs.
 
Franklin, who died August 16, 2018, at age 76, left behind four sons, but no guidance on how to distribute her reported $80 million estate. According to The New York Times, her sons filed paperwork in Oakland County, Michigan, indicating that she died intestate -- that is, without a will. The sons nominated Franklin’s niece to serve as the personal representative of the estate. When someone dies without a will, the estate is divided according to state law. Under Michigan law, an unmarried decedent's estate is distributed to his or her children. (Franklin had been married twice but long since divorced.)
 
Even if the "Queen of Soul" had wanted her estate to go solely to her children, by not having a will or trust, her estate will have to go through a long public probate process, which will likely cost her estate considerable money. If Franklin, who was quite private in life, had created an estate plan that included a will and a trust, she could have avoided probate and kept the details of her financial circumstances private.  Her eldest son reportedly has special needs, which presents other potential complications.  In addition, by not having a will, Franklin has opened her estate up to potential challenges that could drag out the probate process. Without a will to clearly state the decedent's intent, litigation resulting from family conflicts often eats into estates.
 
Also, because Franklin did not plan her estate, the estate will be subject to unnecessary estate taxation. Although she may not have been able to avoid estate tax entirely, there are steps she could have taken to reduce the amount her estate will have to pay.
 
"I was after her for a number of years to do a trust," attorney Don Wilson, who represented Franklin in entertainment matters for the past 28 years, told the Detroit Free Press. "It would have expedited things and kept them out of probate, and kept things private."
 
Estate planning is important even if you don't have Aretha Franklin's assets. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs, and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.
 
Schedule an initial meeting with us today to find out how easy it is to put together an estate plan..  

If you have it to give, you certainly can, but there may be consequences should you apply for MassHealth long-term care coverage within five years after each gift.
 
The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like.  If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax.  You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.
 
Many people believe that if they give away an amount equal to the current $15,000 annual gift tax exclusion, this gift will be exempted from MassHealth’s five-year look-back at transfers that could trigger a waiting period for benefits.  Nothing could be further from the truth.
 
The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with MassHealth’s asset transfer rules. While the $15,000 that you gave to your grandchild this year will be exempt from any gift tax, MassHealth will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years.  You may be able to argue that the gift was not made to qualify you for MassHealth, but proving that is an uphill battle.
 
If you think there is a chance you will need MassHealth coverage of long-term care in the foreseeable future, you should review with us your particular situation before starting a gifting plan.
 

Increased dependency due to illness, disability or cognitive impairments can make seniors susceptible to financial abuse. Nest eggs accumulated over decades also often make seniors attractive targets for predators, whether the predator is an offshore bogus sweepstakes or a care provider who sees an opportunity to be paid more than an hourly wage.
 
Just as sunlight makes the best disinfectant, transparency provides the strongest abuse protection. If others are aware of the senior's finances, either possible predators will see that no opportunity exists to take advantage of the senior or the family members or professionals can step in to keep any fraud from going too far. Here are some steps seniors or their loved ones can take to prevent financial abuse.
 
1. Arrange for account oversight
 
Make sure that someone close to the senior has access to her accounts to be able to see if anything unusual is going on, for instance large checks being made out or larger-than-usual cash withdrawals from ATMs. The oversight can be through copies of monthly statements or online access to accounts.
 
2. Add a Power of Attorney to your accounts
 
When someone holding a power of attorney is added to your bank account, they have the ability to write checks, make investment decisions and take steps if necessary to protect the funds in the account.  And unlike a joint account, is does not give that person ownership of your assets, potentially exposing them to that person’s creditors. But make sure you only add the name of someone you really trust to the account because it can also be an avenue for financial abuse if the power of attorney holder becomes the perpetrator.
 
3. Use a revocable trust
 
Revocable trusts can be useful for a number of reasons. They include all of the benefits of joint accounts, with few of the drawbacks. Your revocable trust gives someone you trust access to your accounts in trust and the ability to step in seamlessly if you become disabled. Unlike a joint account, it does not give the trustee any ownership interest in the account. If, for instance, you had four children but named one as a co-owner of your joint accounts, at your death she would have the legal right to keep the funds rather than share them with her siblings. That would not be the case with a revocable trust.
 
4. Visit often
 
Nothing prevents financial abuse or stops it in its tracks better than frequent visits by loved ones. Either the potential perpetrator will see that he can't isolate the senior and take advantage of him or family members or friends will notice the abuse before it goes too far.
 
5. Get help paying bills
 
If someone helps you pay your bills, they will help you make sure that you're not letting anything slip through cracks or paying something that you shouldn't. They will be able to help you sort through your mail and determine what is important and what is not.
 
6. Use a limited credit card
 
Credit cards are now available that allow another person to monitor the activity of the cardholder and to limit both the amount he spends and where he can spend it. One of these is the True Link card.
 
7. Sign up for do not call registry
 
It is quite easy to register your telephone number with the Federal Trade Commission's Do Not Call Registry either online at www.donotcall.gov or by calling 888.382.1222. While this may not stop someone intent on defrauding a senior, it should help reduce calls from salespeople.
 
8. Sign up for Nomorobo
 
You can sign up for Nomorobo to block robo calls. Unfortunately, it does not work with all telephone providers, including Verizon.
 
9. Consult with an elder law attorney
 
An elder law attorney can help set up a revocable trust and durable power of attorney to assist with financial management, advise on the best protective steps to take in each situation and provide additional oversight to discourage financial abuse.
 
10. Opt out of mail solicitations
 
At www.dmachoice.org the Direct Marketing Association permits you to limit the amount of catalogs, credit card offers and other direct mail pieces you or a loved one receives. You may well ask why the Direct Marketing Association does this. The answer is that they don't want to waste their print and mail costs sending to consumers who have no interest in the product being marketed.
 
While there's no foolproof measure you can take that will both prevent financial fraud and leave you or your loved one with at least some independence and control over his or her finances, the steps described above can make the world a safer financial place. Just remember what was said at the beginning: isolation is a breeding ground for financial abuse (as well as depression and other ills). Social involvement is the best protection.