Estate Planning Bits

Tangible personal property: plan well to prevent regrets and family disagreements

People who provide for their beneficiaries in their estate planning documents generally do a good job with their financial assets but are oftentimes remiss in providing detailed instructions regarding their tangible personal property (ie. household furnishings, jewelry, collections etc…). This is usually due to the erroneous belief that these assets don’t hold much value. However, as an estate planner, I regularly see disputes among family members regarding the division of these assets after death, as their sentimental value is oftentimes under-appreciated when one does estate planning.

The holidays are an opportune time to take a sentimental tour with your children and grandchildren. Share stories and explain the significance of your jewelry, artwork, antiques, and other belongings. Sharing the significance behind each item gives the heirlooms meaning and value in the eyes of the recipient. Specifically, you may wish to:

• Identify specific items that you would like someone to have;


• Decide when you would like others to receive their something special; 


• Express your wishes to a family member or the person named as executor of your estate; and


• Follow-up with language in your Will or other estate planning document to provide a roadmap for the ultimate distributions of these assets.

Your assets do not have to wait until your death to be distributed and enjoyed. However, in the event that you wish to retain your tangible personal property until your death, you should provide detailed instructions as to who you wish to receive your most prized possessions. An estate planning attorney can provide you with the best options as to how best to memorialize your wishes in writing.

By: Todd C. Ratner, Esq.

Massachusetts 2010 budget cuts affect the elderly

Governor Deval Patrick has made significant budget cuts in an attempt to balance the state budget. Many of these cuts directly affect the elderly. Specifically, the Governor cut the Executive Office of Elder Affairs 2010 fiscal year budget in the amount of $7.1 million from a total yearly budget of approximately $2.66 billion. Among the programs affected are:

• Prescription Advantage Program: This program provides drug coverage, mostly as a “wrap around” for drug costs not covered by Medicare. $5.6 million cut.


• Elder Protective Services: $1 million cut


• Councils on Aging: $500,000 cut.

In addition, the Governor intends to propose additional MassHealth cuts effective in April 2010:

• Elimination of podiatry care unless a member is diabetic.


• Elimination of nursing home pre-admission counseling services.


• Reductions in provider payments for Adult Foster Care and Group Adult Foster Care.


• Elimination of most adult dental services.


• Elimination of Personal Care Attendant services for members who receive 14 hours or less of PCA services.

By: Todd C. Ratner, Esq.

2009 tax strategy - now is the time to plan

In keeping with prior tradition, it is important to consider year-end tax planning prior to December 31st. So, here are this year’s tax savings opportunities. Maybe you can find something that can help you:

1. Purchase a car. State and local excise taxes that are paid for the purchase of a vehicle are potentially tax deductible. If you itemize your tax return, you may have the ability to include these taxes as additional deductions. In addition, there are significant tax credits available for energy efficient vehicles purchased before year end.


2. Energy credit for energy conservation. Purchasing insulation for your home that may not only save you money on your heating and air conditioning bills, but will also provide you with an energy-related tax credit. Keep in mind these are credits, not deductions. This means that the credit is a direct amount of money that will be returned to you in the form of an increased refund or lower tax bill.


3. Check gains and losses. You may wish to offset your gains with losses to the extent that you have any gains in 2009. If not, you may wish to sell assets before year end and take the tax loss, which may be utilized up to any gains, and if there are no gains, then up to $3,000.00 from other income for the year, with a carry-forward of the balance. Keep in mind that assets included in retirement plans are normally not tax deductible, so gains or losses are going to be taken on non-retirement plan assets.


4. Charitable deductions. Consider donating property, goods, and other assets, such as cash donations, stocks, bonds, etc. before year end. You may also consider making a 2010 donation in 2009, thus taking advantage of the deduction a year early. Payment of pledges for future obligations may also be made before year end, and these may also be charged to your credit card. By charging them in 2009, they become charitable deductions in this year even though you may not pay the charge card in the same year.


5. IRA Withdrawals. In 2009, it is not necessary to take a minimum required distribution from a retirement plan, thus allowing you to delay taxable withdrawals until the following year. The intent of this law was to allow your fund to accumulate more money for retirement, based on the downswing in the market. However, if you need the money, and if you have other obligations you wish to make, such as gifts or bills paying, consider reviewing the amount of taxable income anticipated for the year and take out only as much as necessary to maintain a low bracket for tax payments. Always be sure to consider the possibility that social security benefits will be taxable if the threshold for income is received based on your marital status.


6. Consider the child care credit or one for dependent care. In many cases, children may be supporting their parents, and they may need to sign a multiple support agreement, whereby the credit for the parent is rotated on an annual basis between multiple children. The credit is eligible for child care expenses as well as the expenses of caring for a disabled spouse or disabled adult who is dependent while you work or look for work.

While there are many other opportunities, these are a few that you can consider before the holidays occur, so there is ample time to attend to any payments, expenditures, or tax issues before December 31.

by: Hyman G. Darling, Esq.

529 Plans: computers and Internet in 2009-2010

Named for Section 529 of the Internal Revenue Code, 529 Plans allow taxpayers to both reduce their taxable estates and to earmark funds for the higher education of a family member. Earnings from 529 Plans are tax-free.

Funds contributed to 529 Plans are invested to pay for an individual’s college tuition, room and board, or other related expenses. Additionally, the American Recovery and Reinvestment Act (AARA,) (also known as the Stimulus Bill,) now permits computer technology and equipment, or Internet access and related services to be purchased for eligible students under a 529 Plan for 2009 and 2010. However, software designed for sports, games or hobbies does not qualify unless it is principally educational in nature.

In 2009, individuals can contribute up to $13,000 per year ($26,000 for a married couple) to 529 accounts without the requirement of submitting a gift tax return. Alternatively, up to $65,000 ($130,000 for a married couple) can be contributed in the first year of a five-year period, as long as there are no additional gifts to that same beneficiary over the same five-year period.

529 accounts can be a great way to move a sizable amount of money out of a taxable estate.

By: Todd C. Ratner, Esq.

Equal is not always fair when it comes to your kids & your estate plan

During my initial consultation with clients, we talk about providing for their children upon death. Many clients want to divide their assets equally among their children. In theory, this tends to make a lot of sense. However, in reality, treating your children equally is not always fair.

Oftentimes, issues such as how much the parents contributed to the education of one child, or whether or not a child took on the role of caregiver, thereby sacrificing time and salary, tend to be overlooked. Parents tend to wear rose-colored glasses when it comes to envisioning that their children will be able to work out any issues that may develop. In the event that these sensitive issues rise to legal battles, they can be divisive and devastating and to your family. Because of this, ongoing communication and careful planning can alleviate many of problems before they arise.

One planning solution that can add liquidity and flexibility to an estate is life insurance. This added liquidity can provide parents with the ability to distribute assets both creatively and practically. A “second-to-die” policy that pays off after both you and your spouse die may be a fairly inexpensive and optimal solution. Even better, a properly designed Irrevocable Life Insurance Trust would eliminate the life insurance from being estate taxable.

By: Todd C. Ratner, Esq.