Things to Consider When Trying to Avoid Probate

apbProbate is the court process of determining who gets your assets when you die.  A Will does not avoid probate, but it governs who will get your assets owned in your sole name.  To avoid probate, you need to structure things so that, when you die, your assets pass automatically to the persons you want to receive them.  Here are some ways to avoid the probate process:

  • Name a Beneficiary.  Many assets, such as IRAs, life insurance, annuities, etc. require the naming of a beneficiary.  For bank accounts and brokerage accounts, you may be able to make a “pay on death” (POD) or “transfer on death” (TOD) designation so that probate can be avoided.
  • Own assets jointly with someone else.  With a joint account, title passes to the surviving joint owner automatically.
  • Use Deed with Retained Life Estate.  You can give a “remainder” interest in real estate to the person to whom you want title to go when you die.  You reserve a “life estate” so you get to live there for life.  Title passes automatically when you die and does not have to go through probate.
  • Don’t Forget Trusts.  In the right situation, trusts can avoid probate and ensure that your assets go to the persons you want to benefit.  They are also great to provide asset protection for your beneficiaries.
  • Give assets away early.  I often joke with my clients that, by giving things away early, you get to avoid probate while also getting to hear people say “thank you.”  Don’t give away things you might need, of course (like all your money).  One variation on this strategy is to have the agent you have named in your Power of Attorney (you do have a Power of Attorney, right?) give your property away just before you die.
  • Deal with the car.  Because the car has a title, you can’t sell it unless the title shows it is yours.  If you die and your spouse survives you, it is presumed that he/she is the surviving joint owner.  Otherwise, there needs to be probate.  The most common way to avoid this is to name a joint owner.  Remember, though, that the joint owner may be liable if you get into an accident.  So you may want to get additional insurance if you own your car in joint names.
  • Don’t forget anything.  The old jalopy, the old passbook account you forgot about, the life insurance policy where you forgot to change the beneficiary when your spouse died.  These all need to be dealt with, and name a beneficiary, if possible.

If you need more information on this, you can contact me at (508) 860-1470 or abergeron@mirickoconnell.com.  You can also view my 10-minute Q&A Fireside Chats on Frank and Mary’s YouTube channel, www.YouTube.com/ElderLawFrankAndMary.Duck

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Posted in Elder Law, Estate Planning, Gifting | Tagged

Make a Resolution to Talk to Your Proxy Agent

apbA few months ago I participated in a great event at Milford Regional Hospital.  The Hospital is actively encouraging Milford residents and the neighboring communities (who obviously are all likely future patients there) to not only complete a Health Care Proxy but to also have a conversation with that Agent to make sure the Agent knows how the person he or she is making decisions for would like to be treated.  At the event, the moderator asked for a show of hands as to how many of the 40+ people in attendance had executed a Health Care Proxy.  Everyone had.  The moderator then asked how many people had written down some instructions for their Agent, telling the Agent how they wanted to be treated.  No one had.  Several people had not even told their Agent that he or she had been appointed.

For the young and invincible, having these kinds of conversations with your Health Care Proxy Agent may seem like a waste of time.  But, is it?  What if you get into a serious accident and are unable to make decisions for yourself?  For seniors, the medical crises that can cause death or incapacitation can come at any time.  For us (and I’m with you on this) not preparing for a medical emergency and its potential consequences is simply foolish.  We all have friends and relatives who have been stricken without warning.  We have all been to the unexpected funerals of those who are younger than we are.  Maybe you’ll be lucky and you’ll recover from that stroke or heart attack that you secretly dread.  But what if you end up not well enough to really make medical decisions for yourself?  What if you really can’t understand what your medical options are anymore, even if you can still talk?

Your Agent’s responsibility starts as soon as your doctor says you are not competent to make medical decisions, and ends when your doctor says you can make the decisions again.  Suppose you have a stroke leaving you totally incapacitated.  Suppose you then come down with pneumonia or the flu.  Your doctor tells your Agent that you need to go to the hospital for the pneumonia.  You may be cured of the pneumonia but the effects of the stroke will remain.  Do you really want to go to the hospital?  Do you want to get “better” so you can go back to staying the way you are now?  These are just the kinds of questions your Agent may have to answer for you.  Have you had a conversation with your Agent about what that answer should be?

If you need more information on this, you can contact me at (508) 860-1470 or abergeron@mirickoconnell.com. You can also view my 10-minute Q&A Fireside Chats on Frank and Mary’s YouTube channel, www.YouTube.com/ElderLawFrankAndMary.Duck

Posted in Elder Law, Estate Planning, Incapacity | Tagged , ,

Upcoming Legal Clinic

FrankandMaryYou can always qualify for MassHealth, even at the last minute, if you need nursing home care or a lot of care at home. In this seminar, I will explore how pooled trusts and annuities can help you qualify for MassHealth.

Below is a listing of my upcoming programs.  Contact your local Council on Aging for more information and to register. If you miss a program, you may always watch them on your local cable access station or on my You Tube channel, “Elder Law with Frank and Mary.”

Duck

Posted in Elder Law, MassHealth, Pooled Trusts, Uncategorized

Asset Protection for Single Seniors

apbThis past spring I did a set of Council on Aging seminars on the legal issues single seniors face. If you are single, and you want your children or friends to avoid the time and expense of probate after you die, you need to make sure that no asset of yours is in your sole name at the moment of your death.  There are four basic ways to avoid probate, and the strategy varies depending on the asset:

Name a joint owner. If you own an asset, stock, bank account, or even real estate jointly with someone, legally you each are entitled to 100% of the asset. Upon your death, your interest in the asset expires, leaving the survivor as the sole owner. Of course, this strategy has some potential drawbacks while you are still alive. Any joint owner of your bank account will have access and the ability to withdraw from it. The joint ownership interest can also be attached by the joint owner’s creditors. However, as long as you are not worried about these possibilities, joint ownership is an inexpensive way to avoid the probate of some assets. Continue reading

Posted in Elder Law, Estate Planning, Gifting, Probate, Trusts, Uncategorized

Elder Law Clinics

My fall elder law presentations kick-off on September 18th!  Learn about Irrevocable Trusts:  Do you need one?  Is the one you have working?

Below is a listing of my upcoming programs.  Contact your local Council on Aging for more information and to register. If you miss a program, you may always watch them on your local cable access station or on my You Tube channel, “Elder Law with Frank and Mary.”

Posted in Elder Law | Tagged ,

Upcoming Elder Law Clinics

 

 

Estate planning, tax minimization and asset protection concerns are very different for single people versus married couples.  Learn what steps singles need to take to protect yourself and preserve your assets.  Attend one of my elder law seminars next month.  Below is my May schedule.

5/8                   1 – 2 pm                      Hudson Council on Aging, 29 Church Street

To register:  (978) 568-9638

5/9                   1 – 2 pm                      Southborough Senior Center, 9 Cordaville Road

To register:  (508) 229-4453

5/15                 1:30 – 2:30 pm            Marlborough Council on Aging, 40 New Street

To register:  (508) 485-6492

5/22                 5:30 – 6:30 pm            Tisbury Council on Aging, 34 Pine Tree Road

To register:  (508) 696-4205

5/29                 10 – 11 am                  Hopkinton Senior Center, 28 Mayhew Street

To register:  (508) 497-9730

5/30                 1 – 2 pm                      Holliston Council on Aging, 150 Goulding Street

To register:  (508) 429-0622

5/31                 3 – 4 pm                      Saltmarsh Senior Center, 81 Washington Street

To register: (508) 228-4490

Contact your local Council on Aging for more information and to register. If you miss a program, you may always watch them on your local cable access station or on my You Tube channel, Elder Law with Frank and Mary.

 

Posted in Elder Law, Estate Planning, Estate Taxes, MassHealth, Probate, Wills | Tagged , , , , , , , , , , , ,

Lisa Neeley featured in NAELA News

Lisa_Neeley_06212016

Mirick O’Connell’s Lisa Neeley was recently interviewed in NAELA News. Click here for the feature.

Posted in Elder Law, MassHealth

Elder Law Seminars

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During the next couple of months, my elder law seminars will be focusing on how the new Massachusetts CARE Act, changes to the federal tax code, the tightening of MassHealth regulations, and other changes in the law might affect you, while also getting a refresher on the basics of wills, trusts, probate avoidance and asset protection.  Below is a listing of my upcoming presentations throughout the community.

 

3/13                  10–11am                      Hopkinton Senior Center, 28 Mayhew Street

To register:  (508) 497-9730

3/19                  1-2 pm                         Holden Council on Aging, 1130 Main Street

To register:  (508) 210-5570

3/21                  1–2 pm                         Southborough Senior Center, 9 Cordaville Road

To register:  (508) 229-4453

3/22                  3–4 pm                         Saltmarsh Senior Center, 81 Washington Street

To register:  (508) 228-4490

3/27                  5:30 – 6:30 pm              Tisbury Council on Aging, 34 Pine Tree Road

To register:  (508) 696-4205

4/3                   1-2 pm                         Hudson Council on Aging, 29 Church Street

To register:   (978) 568-9638

4/4                   1-2 pm                         Holliston Council on Aging, 150 Goulding Street

To register:  (508) 429-0622

4/24                  1:30 – 2:30 pm              Marlborough Council on Aging, 40 New Street

To register:  (508) 485-6492

Contact your local Council on Aging for more information and to register.  If you miss a program, you may always watch them on your local cable access station or on my You Tube channel, Elder Law with Frank and Mary.Duck

Posted in Elder Law, Estate Planning, Estate Taxes, Home Care, MassHealth, Probate, Wills | Tagged ,

Highlights of the New Tax Bill

calc for blogOn December 22, 2017, the President signed into law a new tax bill that has dramatic effects on the current tax system.  Here are highlights affecting most individuals:

  • Increase in the standard deduction to $12,000 for individuals filing single and $24,000 for married couples filing jointly.  This is an increase from the 2017 standard deductions of $6,350 and $12,700.
  • Personal exemptions are no longer allowed.  In 2017 the personal exemption amount was $4,050 per individual.
  • Maximum amount allowed as deduction for local property taxes and state and local income taxes (SALT) is $10,000.  Previously there was no limitation on the amount of these deductions unless the Alternative Minimum Tax (AMT) applied.
  • A new 20% deduction for qualified business income, meaning that 20% of the income from entities such as partnerships, LLCs, or S corporations can be deducted.  The deduction is limited for certain service businesses (such as law, accounting, and medicine) if income exceeds certain thresholds of $315,000 for married filing separate and $157,500 for single.  The deduction applies to income from certain Real Estate Investment Trust (REIT) dividends, cooperative dividends, and certain publicly traded partnership income.
  • Home equity interest, such as with a Home Equity Line of Credit (HELOC), is no longer deductible.  However, mortgage interest remains deductible on the first $750,000 for mortgages taken out after December 14, 2017.  Previously the cap was $1,000,000.
  • The overall limitation on itemized deductions is repealed (this was known as the Pease Amendment).  Previously, certain itemized deductions were reduced when a taxpayer’s income exceeded a threshold.  In 2017 this threshold was $261,500 for single and $313,800 for married filing jointly.  Itemized deductions were reduced by 3% of the amount of Adjusted Gross Income (AGI) in excess of these thresholds.
  • The bill repeals the deduction for personal casualty and theft unless in a declared disaster zone.  Previously a taxpayer was allowed to take an itemized deduction if they suffered a loss, such as a home fire, and they had no insurance to cover the damages, or the damages exceeded the insurance coverage.
  • Increase percentage limitation for deductibility of cash gifts to public charities to 60%.  Previously, the limitation was 50%.
  • Miscellaneous itemized deductions subject to the 2% floor are no longer allowed.  Included in these deductions were tax preparation fees, certain legal fees, investment management fees, unreimbursed employee business expenses, and union dues.
  • The threshold for deducting unreimbursed medical expenses has been reduced from 10% to 7.5%, effective for tax years beginning after December 31, 2016.
  • Exclusion for employer-provided moving expenses is no longer allowed.  Previously a taxpayer was allowed to exclude from income certain moving costs if paid by the taxpayer’s employer.
  • Child tax credit increases to $2,000 per qualifying child.  Previously the amount of credit was limited to $1,000 per child.  The income thresholds at which the credit begins to be phased out has increased from $75,000 for single and $110,000 for married filing jointly, to $200,000 and $400,000, respectively.
  • Distributions from 529 plans can now be made to pay for elementary and secondary education (not to exceed $10,000 per student per year) and the definition of higher education expenses has been expanded to include public, private, or religious elementary school and high school.
  • Alimony payments are no longer deductible by the payor, or includible in income of the recipient.  This change applies for divorce or separation agreements executed after December 31, 2018.  Prior agreements are allowed to adopt this treatment only if parties agree.
  • AMT remains but applies at a higher threshold than previously.  The 2017 phase-out threshold was $120,700 and $160,900, respectively.
  • Eliminates the individual mandate for Obamacare, which was essentially the penalty for failure to maintain a health plan.
  • Increases the exemption amount for estate, gift, and generation skipping taxes.  The exemption amount for 2018 was scheduled to increase to $5,600,000, but will now increase to $11,200,000, effectively doubling all of the exemption amounts.

Stay tuned for further posts on the new tax law.

Posted in Estate Taxes, Income Taxes

‘Tis the Season for Giving

apbThis is the time of year when I receive numerous calls from clients asking about year-end gifts they want to give to their children or other relatives and friends. Many have questions about the amount they can gift away without having to pay a gift tax.

You can give $14,000 per person per year (soon to be $15,000 in 2018) without paying a gift tax or needing to file a gift tax return.  However, our federal tax system gives each of us the right to give away, either during life or at death, up to $5,490,000 (increasing to $5,600,000 in 2018).  These amounts are indexed to inflation and increase over time.  If a gift to one person exceeds $14,000, a gift tax return is needed that year (to keep track of lifetime gifts) but no gift tax is paid until you reach the lifetime gift amount ($5,490,000).

So unless you think your taxable estate at death will exceed the federal estate and gift tax exemption amount ($5,490,000 for 2017; $5,600,000 for 2018), the $14,000 annual exclusion shouldn’t really concern you.  Remember, a gift (no matter how much) is not income to the person receiving it, and thus is not subject to income tax.  Additionally, there is no Massachusetts gift tax.  There is also no federal gift tax to pay unless your lifetime gifts exceed the exemption amount of $5,490,000 (for 2017).  So for practical purposes, unless you have a large estate, there is really no limit to the amount you can give to anyone at any time.

For Massachusetts estate tax planning purposes, there may even be a benefit to giving your kids some of the money they will ultimately inherit from you anyway.  For example, if you die with a Massachusetts taxable estate of $1,800,000, your estate will pay an estate tax of $85,200.  If you give away, say, $200,000 of that before your death, the remaining taxable estate of $1,600,000 Million will only be taxed $70,800.  So you actually save $14,400 in taxes.

There are some things you may not want to give away early.  For example, if the $200,000 you just gave your kids was in the form of low basis stock (i.e. stock you bought a long time ago for very little cost), then leaving it to your kids after you die would probably save them more in capital gain tax when they sell the stock than the amount your estate would save in estate tax, if you made the gift now.  So it’s always best to talk with your accountant or estate planning lawyer before you give away any portion of your estate.

Posted in Estate Planning, Gifting