Estate Planning Bits

Planning for posthumously conceived children in your estate plan

Most individuals would never think to plan for an unborn child in their estate plan. However there may be circumstances where it is necessary to have a clause in your will providing for posthumously conceived children.

With modern day advances in medicine, it is possible for couples to conceive a child after death through in vitro fertilization. This was the subject of Astrue v. Capato, a recent Supreme Court case where Karen Capato conceived and gave birth to twins, eighteen months after her husband Robert’s untimely death due to cancer. When Robert was diagnosed with cancer, his doctors advised him that the chemotherapy treatments would make him sterile. Based on this information, he decided to preserve his sperm in a sperm bank.

The issue brought before the Supreme Court was whether the posthumously conceived twins were eligible for Social Security survivor’s benefits. To answer this question the Supreme Court relied on the definition of “child” under the Social Security Act.

The Supreme Court determined that the term “child” is defined by the intestacy laws of the state where the decedent lived. Florida law was applied because this is where Robert Capato lived at the time of his death. The Supreme Court ruled that the twins were unable to collect Social Security survivor’s benefits because of Florida’s intestacy laws, which state that children conceived after a parent’s death cannot inherit from the parent, unless they are referred to in the parent’s will.

Unfortunately the twins were not provided for in Robert Capato’s will. For this reason, it is advisable to review and revise your will upon any change in life circumstances, especially if you are contemplating in vitro fertilization, where conception may occur after your death.

In Massachusetts, children conceived posthumously are able to inherit and receive death benefits from their deceased parents. In 2002, the Massachusetts Supreme Judicial Court heard the case of Woodward v. Commissioner, which was identical in facts to the recent Supreme Court case. The husband became terminally ill and had his sperm preserved at a sperm bank.

After his death, his wife conceived through in vitro fertilization and twin daughters were born. The highest court in Massachusetts ruled that the twin daughters could receive benefits from the father if three criteria were established. First, the children must be the genetic descendants of the father. Second, the parent must have affirmatively consented to the posthumous conception. Lastly, the deceased parent must have consented to the support of any resulting child. Therefore, if you and your spouse, (or partner,) are contemplating in vitro fertilization, it would be beneficial to expressly consent to support posthumously conceived children in your estate plan.

Had Robert Capato provided for any posthumously conceived children in his will, his twins born after his death would have been entitled to Social Security survivor’s benefits. It is fairly simple to incorporate a provision consenting to conception of unborn children and to provide for their support. The key is to be sure you inform your estate planning attorney so that such a clause can be added.

 

Hyman G. Darling, Esq.

Photo credit: Microsoft   

 

What to do when your spouse dies

Upon any family member’s death, especially your spouse, there is significant emotion that you will face, socially and psychologically. In addition, the financial implications of the loss of your spouse may be over whelming, especially if you were not involved in the management of the assets and finances in the past. Even with significant former involvement, however, there are likely additional mattersthat must be reviewed and addressed in order to properly attend to the ongoing and future paths you should take.

Following is a brief checklist to consider, in combination with speaking with your attorney, financial advisor, insurance agent, and accountant to be sure that all issues are being addressed:

• Contact Social Security to be sure that they are aware of the death, and consult with your accountant about steps that must be taken immediately and how this impacts your tax status in the future.
  
  
• Be sure to pay all funeral expenses in a timely manner to avoid any interest that may accrue, as very often, the funeral home may charge 1.5% per month (18% per year) on unpaid balances.
  
  
• Contact all former employers of the decedent to determine if there are any benefits available, be it life insurance, retirement plans, death benefits, etc.
  
  
• Be sure to verify the contents of your safe deposit box and see if there are any other assets that need to be attended to that were not listed on your income tax return, (such as stock that does not pay a dividend,) and have those assets reregistered or surrendered.
  
  
• Verify savings bonds to determine whether they should be cashed in or maintained, or if the names should be changed on those particular bonds.
  
  
• Before surrendering or cashing in significant life insurance policies, determine what interest rate the company will pay to continue to hold those funds, and do not make any decisions relative to investments until your team of advisors is consulted and reviewed.
  
  
• Verify annuities and other similar assets, but do not cash them in until other advisors are consulted.
  
  
• If there are private policies, such as long term care insurance, health insurance, etc., be sure to cancel the coverage and have refunds issued. Before doing so, be sure that your benefits are not being lost by the surrender.
  
  
• Assemble all records, such as marriage, death, VA, etc., as advisors and financial institutions may wish to see them. Often, these institutions will accept a copy after seeing the original, certified copy.
  
  
• Work with your advisors to determine whether your late spouse’s estate has to be probated, your must fund trusts, or it’s time to consider making gifts.
• Be sure to have your plan updated as soon as possible once you are ready to proceed, but again, no irrevocable, significant decisions should be made until a financial and legal plan is established, and that you are comfortable with that plan.
  
  
• Be sure to have all assets revalued to establish the new “tax basis” to minimize future capital gains.
  
  
• Continually meet with your advisors to be sure that probate is attended to as expeditiously as possible, and review all debts of your late spouse so you know which ones need to be paid and which ones should be postponed.
  
  
• Again, do not make any rash decisions, such as deciding to sell your home or liquidate portfolios, etc., until you are sure you are making the correct decision.
  
  
• Review all of your own needs, including financial, retirement, family issues, etc., before making decisions and consult your advisors for their input. Also, consider whether speaking with your family is appropriate, as they may be biased in advising you, such as whether you should move out of a geographic area or remain closer or further from them.

Naturally, if there are other issues, such as closely-held business interests, partnership interests, mineral rights, patent rights, etc., these will need significantly more attention to determine what, if anything, should be done with them.

The aforementioned is just a brief checklist of items to consider initially. You may wish to print this brief synopsis and keep it available with the rest of your other important papers, so in the event of your spouse’s death, you will be in a position to immediately take action regarding decisions that have to be made quickly. And most of all, consult your advisors ASAP.

 

Hyman G. Darling, Esq. 

Photo credit: Microsoft   

 

What is the Uniform Anatomical Gift Act?

Massachusetts has adopted the Uniform Anatomical Gift Act, which authorizes you to make an anatomical gift of all or any part of your body. Anatomical gifts become effective upon your death and are made to a specified or unspecified donee.

The gift may designated on your driver’s license, in your will, by a recorded oral declaration, or via another document, so long as you are of sound mind and at least eighteen years old. An anatomical gift made within your will is effective upon your death, regardless of whether or not your will is probated, and it will remain valid even if the will is deemed invalid.

Many organizations that accept anatomical gifts provide forms that specifically list themselves as the donee/recipient of the anatomical gift. In the event that you do not designate your intent to make a valid anatomical gift during your lifetime or through your will, other individuals may also make such a gift on your behalf when you die.

Massachusetts laws list the individuals authorized to make an anatomical gift on your behalf in the following order of priority: your (1) spouse, (2) adult children, (3) parents, (4) adult siblings, (5) health care proxy, (6) guardian, or (7) any other person so authorized.

You may also refuse to make an anatomical gift. One way of executing your refusal is by signing a record, which is witnessed by at least two adults. You may also execute a refusal by stating it within your will, regardless of whether it is probated or invalidated. Additionally, any form of communication made during terminal illness or injury to at least 2 adults, one of whom must be disinterested, will also satisfy to render a refusal valid.

Donors or other individuals authorized to make anatomical gifts may also amend or entirely revoke a previously completed anatomical gift. There are several means of doing so, which include the following: signing a record witnessed by two adults, at least one of whom is disinterested, executing a later gift that amends or revokes the previous document either expressly or by inconsistence, or in the instance that the anatomical gift was made in a will, the gift may be amended or revoked in the same manner used to revoke or amend a will. Donors may also revoke their refusal of a gift by destroying or cancelling the record or any portion thereof.

 

Hyman G. Darling, Esq.

Photo credit: Microsoft   

 

Medicaid planning - making smart decisions to preserve your assets

While married individuals have plenty of benefits and options available to preserve their assets, while also securing Medicaid eligibility, a single person may not have quite the same opportunities. This is true because a married couple’s assets are counted in total when determining the assets available for expenditure on long-term care. A single person’s income is countable towards long-term care expenses, except for an allowance for medical insurance and $72.80 per month for a personal needs allowance.

Even a Prenuptial Agreement will not hold up to protect a couple’s assets in the unfortunate event that one spouse becomes incapacitated and needs long-term nursing home care.

So what should one do? Divorce?

Well, that is one option, and Attorney Darling appeared on the Today Show regarding this topic. But there are other options. Unfortunately, the choices are not optimal, since you will have to part with your assets irrevocably five years before you become ill. This means that your assets have to be either gifted or transferred to a trust. You may also transfer your house to your children, with or without the right to live in it, (called a life estate,) or you may consider purchasing long-term care insurance.

The previous law included a three-year waiting period, but that changed in February of 2006, so any transfers made prior to that time are “grandfathered in” under the prior rule, where the waiting period would exempt those assets.

In any event, it is not an easy decision to transfer assets outright, without future use of them, and it is also important to comply with the rules, since there is not much gray area in this process. In order to comply with the exceptions to the rules, the regulations must be followed carefully and strictly. Mistakes are often not forgiven and very difficult to fix when there is a crisis situation.

Anyone dealing with these issues should not rely on advice given to them by their friends, neighbors, or other individuals, but should seek the counsel of a qualified elder law attorney. That is the only way to assure that you are making the correct decisions.

 

Hyman G. Darling, Esq.

Photo credit: Microsoft