Estate-Planning

Providing comprehensive Estate Planning for now and the future.

We assist our clients in creating the important legal documents needed for estate planning. Many clients think a will is the only part of estate planning. Estate planning is a comprehensive set of documents designed to allow others to assist you when you need help with medical decisions and finances, and managing your estate during lifetime and after death.

Estate planning documents take into account your unique personal and financial situation, including estate and income taxes, and a spouse or a child’s disability. Give us a call today to discuss your unique needs. 

Our Basic Package

Will

A document which disposes of all of your property titled in your name alone which does not have a named beneficiary at death – “Probate Property”. The will has to go through a court process called probate administration before your wishes in the will can be carried out.

Durable Power of Attorney

A document in which you designate an agent or “Attorney-in-Fact,” a trusted person, to have the authority to administer all of your financial affairs.

Health Care Proxy

Also called “Durable Power of Attorney for Healthcare.” A document in which you give the authority to another person, a “Health Care Agent”, to make medical decisions if you are incapacitated, including life-sustaining treatment.

HIPAA Release

A document that allows others to speak to your medical professionals while you are still competent.

Additional Documents

Revocable Trust

1. A Revocable Trust is a great estate planning tool when you want to avoid probate on your assets, to reduce the costs and time delays associated with probate.

2. A Revocable Trust is important if you own real estate in different states. If you transfer the out of state property into your trust, then you avoid probate for your heirs in those states.

3. You would have complete control over the assets in the trust.

4. You can amend or revoke the trust as long as you are alive and competent.

5. This trust does not provide any protection from nursing home costs and estate taxes for the estate of the surviving spouse.

6. If a married couple signs a joint revocable trust to avoid probate on real estate and other assets, after both spouses have passed away, or the surviving spouse is incompetent, the trust becomes irrevocable. Your named successor trustee takes over the trust and uses the trust funds for your benefit.

7. Upon your death, or in the case of a married couple, upon the death of the surviving spouse, the trust property would be distributed to your children or whoever you named to leave your trust property to at your death.

8. This type of trust, along with proper trust funding, would allow your children or other beneficiaries to avoid the expense and delays of probate if they were to sell your house and to secure the bank accounts and other investments in the trust after your death.

Irrevocable Trust – Massachusetts Mass Health Rules

If a married couple or individual transfers a primary residence or a vacation home to an irrevocable trust, The individual(s) who made the transfer will be disqualified from receiving nursing home Mass Health benefits for 5 years after signing the deed transferring the property to the irrevocable trust. I would also recommend transferring at least $35,000.00 into this trust at the same time as a capital reserve for capital improvements and major house repairs.

If a married couple or individual transfers a primary residence or a vacation home to an irrevocable trust, The individual(s) who made the transfer will be disqualified from receiving nursing home Mass Health benefits for 5 years after signing the deed transferring the property to the irrevocable trust. I would also recommend transferring at least $35,000.00 into this trust at the same time as a capital reserve for capital improvements and major house repairs.

The terms of the irrevocable trust are as follows:

1. You are the grantors (creators) of the trust.

2. You will retain the right to income of the trust during your lifetimes. Income is rent if you rent out the place, or interest and dividends earned if the house is sold, and the trustee invests the sales proceeds. Your children cannot kick you out of the house.

3. You would continue to pay the utilities, insurance, taxes and carrying costs of the house as you always have.

4. I recommend you put at least $35,000.00 “capital reserve” in a bank account titled in the name of the irrevocable trust. These funds would cover any repairs, replacement of appliances or capital improvements to the house of $1,000.00 or more. Mass Health caseworkers consider your payments of $1,000.00 of more for these costs from your money outside the trust additional gifts subject to a new 5-year Mass Health disqualification period.

5. I recommend that one or both of your children be the trustee under current MassHealth rules. I don’t recommend that either of you be the trustee of the trust.

6. You will have no access to the principal you place into that trust for your lifetimes, so you cannot take a loan on the property after you transfer it into the trust.

7. The property is protected from your children’s creditors in case of divorce, a lawsuit against your children or other creditor problems.

8. This trust allows you to use your $500,000.00 capital gains exclusion if the house is sold while you are alive.

9. The kids receive a step up in income tax basis on the property to the fair market value of the property if the house is not sold until after both spouses die. If they sell the property shortly after that, the beneficiaries pay little or no capital gains taxes on the sale.

10. You can give the trustee(s) the right to distribute principal to your children during your lifetime from the trust. If you run out of funds outside the trust, the trustees can pay out to themselves and then pay for your care needs.

11. The irrevocable trust will always have to be reported on a MassHealth application if either of you need to qualify for nursing home Mass Health.

12. You cannot change the terms of the trust.

13. You avoid probate on the house after both of you pass away.

Five years after you transfer your property and some cash into this irrevocable trust, the MassHealth disqualification period resulting from these gifts into the trust from your nursing home costs would have passed. At that time, those transferred assets would be protected from nursing home costs under current MassHealth rules if you ever require nursing home care.

If you do not require nursing home care during the 5-year MassHealth disqualification period, this transfer will be safe.  If either of you go into a nursing home during that 5-year period, you must pay privately for the balance of 5-year disqualification period and then apply for MassHealth.

By use of the irrevocable trust, then, you can feel secure that your assets will be managed properly and for your benefit during your lifetimes, and after the death of the surviving spouse, whatever assets remain will be distributed to your daughter.

A-B- Trust (Credit Shelter Trust)

Trusts that help minimize federal and state estate taxes at your death if your estate exceeds the federal or state estate tax exemptions.

Supplemental Needs Trusts

There are 2 types of supplemental needs trusts.

The first type, a third party supplemental needs trust, is usually established by a parent or parents ahead of time as part of their estate plan to provide for the management of assets of a disabled child upon both parents’ death. This trust if managed correctly, supplements a disabled child’s needs while maintaining public benefits.

The second type, a First Party Supplemental Needs  Trust (or (d)(4)(A) Trust) has to be used to protect a disabled person’s public benefits if the disabled person receives money directly from a direct inheritance, back Social Security benefits, a legal settlement, or a change in benefit rules.

  • As the individual received the money directly, it is their money, so that is why they need a 1st Party Trust. It would only be a third-party trust if someone had set up a trust for your benefit and funded it directly.
  • A qualified disability trust can exempt a significant amount of income from being taxed each year.
  • Once the trust is signed the trustee can set up the trust account at any bank or investment account that you decide to put the money in.
  • The Trustee of a first-party supplemental needs trust can pay directly for items for the beneficiary, or the Trustee can set up a Trulink Card attached to the Trust bank account for the beneficiary or their caregiver to buy the beneficiary items directly.
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Compassionate Legal Services for Life Care Planning and Elder Law

40 Kenoza Ave
Haverhill, MA 01830
contact@faithdelaneylaw.com
Fax: (978) 374-5885