Monthly Archives: March 2009

Once I execute my Trust do I need to fund my Living Trust?

In order for the revocable trust to eliminate probate, it is imperative that all family assets be transferred into the trust prior to death. Unfortunately, a large number of people go to the expense of forming a revocable trust but never actually fund the trust during their lifetime.

Funding the trust simply requires transferring legal title from husband and wife into the name of the trust. For example, if John and Mary Smith are funding their revocable trust, they will substitute their existing title to their assets from “John Smith and Mary Smith, husband and wife” to “John Smith and Mary Smith as Trustees of the Smith Family Trust, Dated March 24, 2009.”

For real estate, title is changed by executing and recording a deed. Whereas bank accounts and brokerage accounts can be transferred by simply changing the name on the accounts to reflect the trust as the new owner. This can be done by completing a new account application and assignment paperwork from the particular bank or brokerage house. Shares of stock and bonds in registered form are changed by notifying the transfer agent for the issuing company and requesting that the certificates be reissued in the name of the trust, using the transfer agent’s paperwork and protocol.  Many other types of property can be transferred by a simple written declaration called an Assignment.

If you have questions on trust funding options or estate planning call me for a free consultation.

How can a Living Trust protect me?

Living Trusts are one of the most common estate planning tools in use today. This legal arrangement, usually drafted by an estate attorney, creates a separate entity called a Living Trust. A Living Trust is called that simply because it is created while you’re alive (as opposed to a “testamentary” trust created after death).

Basically an after-death trust (Testamentary Trust) will spring into existence, usually by virtue of a will, after a person’s death. The assets to fund this type of trust must usually go through the probate process. In some cases this type of trust may need to be court-supervised even after the estate is closed.

A living trust, on the other hand, is a trust made while the person establishing the trust is still alive.

  • A living trust also is useful for individuals subject to estate taxes.
  • Living Trusts avoid probate, since they are completely private. Because a trust is recognized as a separate legal entity, distributions can be made by a Trustee without any involvement from the courts. The courts maintain no control over the Trust’s assets, and do not tie up the assets in a lengthy (and costly) probate process. The Trustee simply distributes assets to named heirs, but only if those assets have actually been placed inside the Trust.
  • No worry about losing control of assets. Carefully constructed Living Trusts protect your assets.

Every family’s situation is different. Feel free to contact me if you need further guidance.

Q: Is the Masshealth/Medicaid application available online?

YES. The Massachusetts Office of Health and Human Services has downloadable copies of the application on their site.

Please be advised, there are several applications and booklets.  Therefore, it is very important to choose the correct application/information for your specific situation.

The MassHealth eligibility regulations can be found by clicking here.

If you have questions about the eligibility process or the potential look back back period for transfers of assets in the years prior to applying for MassHealth, feel free to contact my office to schedule a consultation.

Massachusetts Probate – What to expect

Probate is the actual process by which legal title of property is transferred from the decedent’s estate to his/her beneficiaries. Probate proceedings may occur if a person dies with a Will and probate proceedings may occur if a person dies without a Will.

Essentially, there are two types of probate administration in Massachusetts:

  1. The first type of probate administration involves a probate estate where there is a Will. In this case a person’s probate assets will pass according to the directions set forth in the will.
  2. The second type of probate administration is for people who die without drafting wills. This form of estate administration is called “in testate”. In this case, a person’s probate estate will be distributed according to state statute. This means the state decides the parties who receive a distribution of your estate. In some in testate cases the state itself will receive some or all of your estate.

In both cases the probate court in Massachusetts oversees the distribution process. As a first priority, an experienced probate lawyer will (or should) officially secure your executor appointment with the court. Next he/she will assist you with the following:

  • Analyze your current personal probate situation and/or obligations;
  • Help you inventory all property of the decedent;
  • Determine the heirs-at-law and next of kin of the decedent;
  • Prepare estate and income tax returns for you;
  • Pay the expenses of estate administration;
  • Distribute the assets to the proper person’s;
  • File all required pleadings and motions to begin and complete the Probate process.

I do hope you will use me as a resource if you have questions about any of this.

Do you know the Nursing Home Bill of Rights?

Federal Law and State law have been established requiring that all facilities are to protect the rights and dignity of every resident.  The most basic of which is to provide a clean, healthy, attractive environment. Residents are entitled to equal treatment regardless of creed, religion, ability to pay, or source of payment.

Under federal regulations, all nursing homes are required by law to have written policies called the Nursing Home Residents’ Bill of Rights, which detail the rights of the residents. Every nursing home is mandated under Federal Law to make these policies available to any resident who requests them. Always request it.

When reviewing a particular Nursing Home Residents’ Bill of Rights make sure the following topics, at a minimum, are addressed in the document:

  • The right to be fully informed before or at admission of your rights and responsibilities as a resident and to be notified of any changes or amendments to those rights and responsibilities;
  • The right to be fully informed of the services available in the facility and of the charges related to those service;
  • The right to be fully informed of one’s own medical condition unless the physician indicates in the medical records that it is not in the best interest of the patient to be told. Additionally, informed consent, including the right to be advised by a physician or appropriate professional staff of alternative courses of care and treatments and their consequences;
  • The right to choose one’s own doctor or specialist;
  • The right to manage one’s own funds or to authorize an agent to manage them; and
  • The right to retain and use one’s own personal clothing and possessions as space permits, unless doing so infringes upon the rights of other residents.

Estate Taxes – Are there ways to avoid estate taxes?

YES.  Does this sound too good to be true? I counsel clients to reduce and often eliminate estate taxes through various techniques, including but not limited to:

  • Drafting Credit Shelter Trust Provisions; whereby spouses leave some of their property in trust for their children, but give the surviving spouse the ability to access some or all of it for the remainder of their life. This keeps the second spouse’s taxable estate half the size it would be if the property were left entirely to the spouse.
  • Drafting “QTIP” Trust Provisions; whereby couples can postpone estate taxes until the second spouse dies.  This allows for additional gifts qualifying for the annual exclusion.
  • Drafting Charitable Remainder Annuity Trusts; whereby a tax free gift is made to to a tax-exempt charity and the surviving spouse and/or children receive perpetual income from the transfer.
  • Drafting Irrevocable Life Insurance Trusts; whereby the value of life insurance proceeds is removed from the client’s estate.

What are the rates for federal estate taxes?

In actuality it really depends on your date of death. The federal government imposes a hefty estate tax when your property is worth more than a certain amount. In determining your gross estate, the government values all of your assets including, but not limited to bank accounts, stock, bonds, annuities, mutual funds, real estate, retirement plans, Individual Retirement Accounts (IRA’s), and life insurance.  It is important to note that property left to a spouse is exempt from the tax, as long as the spouse is a U.S. citizen. However, in many cases this merely defers the tax due until the surviving spouse’s death. In addition, Massachusetts has its own estate tax which provides a much smaller $1,000,000.00 exemption. With the escalation of real estate values in the last twenty years many retirees have become vulnerable to Massachusetts estate tax and/or federal estate tax.

Year of Death    Exempt Amount

2001                    $675,000
2002-03            $1 million
2004-05            $1.5 million
2006-08            $2 million
2009                   $3.5 million
2010                   No estate tax
2011                    $1 million unless Congress extends repeal

The rates are steep, starting at 37%. The maximum is 55% for property worth over $3 million. The maximum rate is scheduled to decline gradually to 45% in 2009. There will be no estate tax in 2010, if the current tax law (passed in 2001) is not amended. Unfortunately, in 2011 the exemption is scheduled to drop back to $1,000,000.00 unless congress extends the repeal.

Basics of Estate Planning

Estate Planning is not only the process by which you’re able to protect your assets and independence during your lifetime in the event of a physical or mental incapacity, but also is the process by which you’re able to guide and protect your family after death.

Below is a check list of documents and objectives to help get your Estate Plan in order and to review with a knowledgeable estate planning attorney:

Your Estate Planning Checklist

1. Trusts: An after-death trust will spring into existence, usually by virtue of a will, after a person’s death. A living trust, on the other hand, is a trust made while the person establishing the trust is still alive. The living trust is commonly used to avoid Probate and keep the estate confidential.
2. Will: The Will is a legal document by which to designate the persons who will receive the assets you own upon your death. The Will is also used to name perspective guardians for children who are also minors.
3. Power of Attorney: A Power of Attorney is a legal document which expressly authorizes another person to manage your financial affairs. The Power of Attorney is often used to avoid costly and public conservatorship hearings.
4. Health Care Proxy: The Massachusetts health care proxy is a legal document, which provides for an individual’s right to determine the course of his medical care in the event of some future incapacity. The Health Care proxy is often used to avoid costly and public guardianship hearings.
5. Living Will: A living will allows a person who is unconscious or incapacitated to express his or her desires regarding the use of extraordinary measures to extend his or her life when there is no reasonable expectation that he or she will regain consciousness.
6. Estate Taxes: The federal government imposes a hefty estate tax at your death when your property is worth more than a certain amount. In addition, Massachusetts has its own estate tax which provides a much smaller exemption and also imposes an estate tax at your death when your property is worth more than a certain amount. Estate Planning can reduce and often eliminate estate taxes through various techniques.
7. Gift Taxes: If you give away more than $12,000 per year to any one person or non-charitable institution, you may be assessed federal “gift tax,” which applies at the same rate as the estate tax. However, there are several gifting strategies that a thorough estate planning attorney can implement to mitigate these effects.