Estate Planning Bits

Pretermitted - what it means to omit a child from your will

Although a surviving spouse may not be disinherited, there is no obligation under the law for a person to leave assets to his or her children. Nonetheless, the law does require that the testator of the will mention the children within the will. Any child not specifically mentioned in the will is considered omitted, or pretermitted. 

Most states, including the Commonwealth of Massachusetts, have so-called “pretermitted heir statutes”, under which an omitted child receives the same share of the estate as if the testator had died intestate. The intestate portion is equivalent to the amount that the omitted child would receive in the event that parent dies without a valid will.

The child does not need to be specifically disinherited by the parent to avoid pretermission. But, the parent must mention the child in the will without leaving the child any asset. For example, if a surviving parent provides for two of their children in the will, but provides that the third child receive no assets, as she has been sufficiently provided for during her lifetime, that third child is not pretermitted.

 

Todd C. Ratner, Esq.

 

Photo Credit: Microsoft

Same sex couples may now receive Medicaid spousal protections

The United States Department of Health and Human Services (HHS) has announced that it will now allow states to extend Medicaid long-term care protections to same sex domestic partners that have historically only been provided to heterosexual spouses of nursing home residents. The government’s effort derived from a 2010 presidential memorandum, which directed HSS to explore additional steps it could take to improve the lives of lesbian, gay, bisexual and transgender people. 

Nursing home residents may only have $2,000 of countable assets to qualify for Medicaid, which covers their nursing home costs. However, a community spouse of a nursing home resident may keep up to $109,560 plus one residential home and a few other assets. Previously, a same sex spouse has not been eligible for the community spouse protections because the federal government did not recognize same sex marriage. This lack of spousal protections has kept same sex couples, especially lower income same sex couples, from retaining some of the ailing partner’s finances and remaining in their home. 

HHS is now informing the states that they have the legal authority to extend these protections, but the government will not require states to do so. However, in some cases, not being recognized as a married couple can be an advantage, as the healthy spouse that has held assets in their individual name can keep everything. As such, it is advisable to speak with an elder law attorney regarding ever-changing rules of Medicaid. 

Todd C. Ratner, Esq.

 

Photo Credit: Microsoft

Special needs trusts - security for your special needs loved one

   

 

This video will help you understand why special needs trusts are so important to help support your loved one in need without disqualifying the person from government benefits. Todd C. Ratner, Esq. 413.781.0560, [email protected]

© 2011, Bacon Wilson, P.C. This video has been prepared by Bacon Wilson, P.C. for informational purposes only and is not intended and should not be construed as legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Viewers should not act upon this information without seeking professional counsel. Do not send us information until you speak with one of our lawyers and get authorization to send that information to us.

The perils of estate planning and retirement benefits

Whether it is a 401(k), 403(b), or just a regular IRA, for many people, their retirement benefits are their largest asset. That is no surprise, since retirement plans are built up over decades of contributions, which then hopefully appreciate over time. 

How to dispose of these assets at death is a crucial part of any estate plan, and the tax ramifications of a careless distribution can be punishing because all retirement assets have a built-in income tax liability. The dollars in the plan are pre-tax dollars, and income tax is deferred until the participant takes money out of the account after retirement. 

As an example, assume Elizabeth has a $1,000,000 IRA and a house that is worth $1,000,000 with no mortgage. She would like to leave the IRA in trust for her young children and the house to her spouse after she dies, so that everyone gets an equal share. What Elizabeth fails to realize, however, is that the IRA is really only worth $600,000, (assuming a combined federal and state tax rate of 40%), because her kids will have to pay the income taxes due. 

So, how can Elizabeth get around this problem? Roth conversion or life insurance could be a solution, but perhaps it would make more sense to leave the IRA to her spouse. A spouse can take advantage of the spousal rollover and continue to defer the income taxes over his own lifetime. 

If instead, Elizabeth would like both her spouse and their children to benefit from the IRA, she’ll need to consider whether to put the IRA into a trust or to split up the beneficiary designations. Both options are feasible, but each has its own income and estate tax consequences. A qualified attorney can assist you in preserving your largest asset for future generations. 

 

Julie R. Lackner, Esq.

 

 Photo Credit: Microsoft

Health care proxies for students

It is April again, that time of year when spring finally arrives in Massachusetts, the snow is melting, and high school students everywhere find out where they will be attending college in the fall. Among the excitement of poring over course catalogs and memorizing dorm room locations, it is easy to forget that even students need health care proxies. 

A health care proxy is a basic estate planning document in which the principal designates someone to act as their health care agent, who will make health care decisions for them if they are unable to do so themselves. 

If you are confused as to why an eighteen year old would need an estate planning document, consider the following: that eighteen year old is a legal adult. It may seem obvious that the student’s parents would make any medical decisions in the event of an emergency, but that is simply not true. Adults are in charge of their own health care. Many health care facilities won’t even speak to someone who doesn’t have a valid health care proxy, regardless of the relationship between the parties. 

To avoid this potentially frightening and frustrating situation, be certain your adult child has all their documents in place before heading off to school in the fall.

 

Julie R. Lackner, Esq.