Trusts and Estates

The Spousal Elective Share

When it comes to your estate plan, the law seeks to protect and carry out your intentions with respect to the disposition of your property upon your death. But Massachusetts law may dictate a different outcome if you leave your spouse out of your will. In Massachusetts, like many other states, the elective share statute aims to prevent one from disinheriting a spouse.

The elective share statute permits a surviving spouse to set aside their deceased spouse’s will and instead claim a statutorily-defined portion of the deceased spouse’s probate estate. Depending on the existence of descendants of either or both spouses, parents of the decedent, and/or other close family members of the decedent, the surviving spouse may claim an amount ranging from one-third of the probate estate to $25,000 plus one-half of the remaining estate. A portion of that share may be received as a life estate in the subject property.

Unfortunately, in many circumstances, the elective share statute misses its mark in achieving a fair and equitable outcome for the surviving spouse. For example, the current statutory scheme fails to take into account the length of the marriage, thereby treating a recent marriage exactly the same as 40-year … Keep reading

Planning for Your Children’s Financial Security

Last month I reviewed how to approach the extremely important decision of choosing a guardian for your minor children. Let’s now look at some vehicles for ensuring financial stability for your children in the event of your passing, which is particularly important if you are divorced. The options outlined below may already be familiar to you; hopefully, this information can help get you started on deciding which may be a good fit for your circumstances. Keep in mind any special considerations, such as setting aside money specifically for education or medical expenses, your child’s age and ability to manage money, or any special needs for which you need to account. Weigh these in conjunction with the ease and expense of setting up and administering each option.

Establish a Trust. A trust is undoubtedly the best vehicle for managing and protecting your children’s assets. A trust can be structured in numerous ways to accommodate your specific intentions. The trustee you name can provide asset management and decision-making in accordance with the parameters you specify.  Distributions of trust assets to your child can be limited to specific purposes like education and health expenses, or you can give the trustee broad … Keep reading

Planning Around Your Child’s Partner

We all love our in-laws, right?  (wink, wink)  Shielding your hard-earned assets from a child’s spouse in the event of divorce is a critical component of your estate plan.  Perhaps you love your son-in-law, but would prefer to pass assets down within your own bloodline.  Or, perhaps having been divorced yourself, you realize the possibility of your own child’s divorce, and you worry that your son’s inheritance could end up in the hands of his ex-spouse and their new family down the road.  Whatever underlies your concerns, there are ways to prepare an estate plan around these contingencies.

But before meeting with your estate planning attorney, a first step might be having a conversation with your child about a prenuptial agreement.  Admittedly, it can be difficult to discuss financial matters with your children, and even more uncomfortable to broach the subject of their potential divorce.  Recognize that your child may feel offended and hurt if they sense that you disapprove of their partner or question their judgment (in personal or financial affairs).  Keep in mind that you can’t force a prenup on your child, as doing so could invalidate it.

Whether or not a prenuptial agreement is on the … Keep reading

The SECURE Act - Considerations for January 2020

Often times in a divorce matter, the two biggest assets the parties have are their house and retirement accounts.  While everyone was busy with the recent holiday rush, President Trump signed the SECURE Act into law as part of the government’s spending bill.  The SECURE Act takes effect on January 1, 2020, and makes important changes to retirement savings.  While not a law directed specifically to divorcing spouses, it is important to understand the changes the SECURE Act has made given that retirement accounts are a significant consideration in most divorce matters.  Some of the most important changes the SECURE Act made are as follows.

The SECURE Act now allows for annuities to be included as 401(k) investments.  Annuities can be complex investments with many different moving parts.  In some instances, an annuity cannot be divided between spouses.  The inclusion of annuities in 401(k) plans will likely complicate the division of retirement assets in the context of a divorce.

The SECURE Act also increases the age for required minimum distributions (RMD) for qualified retirement plans.  Previously, RMDs were to begin in the year in which the account holder turned 70.5.  The SECURE Act has increased the RMD age to … Keep reading

Estate Planning and Re-tying the Knot

If you find yourself lucky in love after a divorce, you have myriad considerations when deciding whether to remarry. If you have children from your prior marriage that you would like to provide for, I recommend that updating your estate plan be top of mind. A carefully crafted estate plan can function to provide for both your children and new spouse in a way that meets your goals.

Trusts are perhaps the most common estate planning tool used to protect assets and benefit different people. For married couples in particular, a qualified terminable interest property (“QTIP”) trust allows a spouse to enjoy access to assets held in trust during his or her lifetime while limiting the spouse’s ability to control the disposition of those assets after his or her death. This is an effective tool for providing your spouse access to assets for the duration of his or her life while preserving the remainder for your children after his or her death. You may also utilize a QTIP trust in conjunction with other trusts or estate planning vehicles to divide your assets.

Additional advantages to QTIP trusts include qualification for the unlimited marital deduction from state and federal estate … Keep reading

Updating Your Estate Plan in the Event of Divorce

It’s advisable to review and update your estate plan with any change in personal circumstances, financial circumstances, changes in the law, or just the passage of an extended time. But if you’re in the midst of a divorce, or contemplating one, this may be the furthest thing from your mind.  Here are a few key reasons why you should make updating your estate plan a top priority:

Divorce can take a while.  Divorce proceedings often take many months, and you wouldn’t want your soon-to-be-ex-spouse benefitting from or having any rights with respect to your estate if you were to die in the meantime.  While beneficiary designations for certain assets cannot be changed once a divorce proceeding is filed, you may be able to update documents like a Will, Trust, Durable Power of Attorney, and Health Care Proxy at any time, whether or not your divorce is finalized.

Your estate plan may no longer reflect your wishes.  In Massachusetts, a final divorce automatically revokes any beneficial provisions for and fiduciary appointment of your former spouse (or his/her family members) in documents like your Will and Trust, but leaves the rest of these documents in-tact.  The “back-up” individuals named in your … Keep reading

How To Read A Trust

If you are getting divorced, you may find that your marital assets include interests in one or more trusts.  It could be that you and your spouse established the trusts during your lifetime, or perhaps a family member created the trusts for the benefit of you or your spouse.  Either way, you need to know what the trusts say.  They may play a crucial role in the division of your assets or the support you will receive.

It is not uncommon for folks to know little about what the trusts say or do.  It happens all the time and is no reason for embarrassment.  It is a good idea to begin to read the trusts yourself and to ask questions about them.  You should rely on the advice of a trusted estate planning attorney.  If your divorce lawyer does not have an estate planning lawyer that he or she works with, you will need to find one.   Here are a few tips in reviewing your trust:

Familiarize yourself with the terms.  There are basic terms of the trust that you will need to know.  (Hint: A lot of this information will be found on the first page of … Keep reading

Why You Need a Trust

People often ask “Why do I need a trust?”  Some folks think they can get by with a simple will.  Here is why you probably need more than that:

  1. Estate tax savings. Depending on the size of your estate and your state’s tax laws, there may be a significant tax advantage to including trusts as part of your estate plan.
  2. Probate avoidance. If you fund your trust during lifetime, you will avoid probate.  Avoiding probate means your family will not have to go to court to authenticate your will after your death in order to access your assets.  It saves time and money.
  3. Planning for incapacity. Another benefit to funding your trust during life is that your successor trustee can access the assets for your benefit if you become incapacitated.  If you are in the hospital or a long term care facility, who will pay your bills and manage your assets?  If your trust is funded, the successor trustee can do that.  Otherwise, your family may have to go to court to have a conservator appointed to oversee your assets.
  4. Limiting children’s access to their inheritance. If you have minor children, you want to make sure their inheritance is
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What Is Federal Estate Tax?

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The federal estate tax (sometimes called the death tax) is a one-time tax that is imposed at death.  If you die with a certain dollar amount of assets, an estate tax return may be required and a tax may be due.  If a return is required, it is due 9 months after the date of death.

Sometimes clients confuse the estate tax with an income tax, but it is not a tax on income.  It is a transfer tax.  Essentially, it is a tax on the wealthy imposed at death.

When does it apply?

In 2019, a federal estate tax is due for all estates with assets of $11,400,000 or more.  If you die with a gross estate under $11,400,000, no estate tax is due.  If your gross estate is over $11,400,000, you pay a tax on the overage.  In general, the tax rate is between 18% and 40%, but it gets to 40% pretty quickly.

The large exemption amount is due to the recent changes in the tax laws that took effect in 2018.    The federal estate tax amount used to be $5 million adjusted for inflation.  It is now $11 million adjust for inflation so it increases … Keep reading

trust shieldHi there,

I continue to be amazed by the distinguished group of divorce and probate lawyers I have the privilege to work with at Burns & Levinson. Today’s decision on Pfannenstiehl v. Pfannenstiehl, a case which will guide family financial planning across the country, is a credit to their hard work and dedication. We’re proud to bring you part two of this story which our contributor Tiffany Bentley brought to our attention back in April. This case was deemed “unwinnable” by many, so it is hugely important to our client as well as a celebrated achievement for our team.

Best,
Nancy


Almost exactly four months ago, I blogged with great pride about the compelling arguments from my colleague, Bob O’Regan, to the Supreme Judicial Court in the matter of Pfannenstiehl v. Pfannenstiehl. Today, I blog with even greater pride about the SJC’s unanimous decision in our client’s favor.

In Pfannenstiehl, initially both the Trial Court and the Appeals Court went to great lengths to ensure that the wife would benefit from an irrevocable trust established by her (now former) husband’s father. The husband had no access to or control over the trust. Assets and … Keep reading