Partner's Letter

If Winter comes, can Spring be far behind? - Percy Bysse Shelley

Dear Clients and Friends,

At Samuel, Sayward & Baler LLC, the idea of spring makes us hopeful for the coming year and we remain grateful to our clients for their support during these challenging times. We believe that 2021 will sprout shoots of rejuvenation as winter thaws, vaccines roll out, and the warmer weather finds us emerging from winter’s hibernation and coming together once again. It is also our sincere hope to be welcoming clients back to the office this year.

With the changes occurring in Washington, we want to assure our clients that we are here to guide you through any new laws or regulations that can have an impact on your planning. Attorney Baler discusses some of the possible proposed tax law changes in her article below and, rest assured, we are here to help you in creating the most comprehensive and best Estate Plan for your family.
 
In this issue:
●     5 Ways in Which the Best Laid (Estate) Plans can go Awry
●     Possible Tax Changes on the Horizon
●     Ask SSB with questions about the various kinds of Trusts
●     An update of What’s New at the Firm
 
If anything has caused us to take pause and reflect on our life, it’s been the year of 2020. Many of us have been sitting back in our recliners contemplating our lives and our futures and taking solace in the fact that we have a Will and a Trust and therefore, we are all set should something happen. However, this may, or may not, be the case. In her article 5 Ways in Which the Best Laid (Estate) Plans can go Awry, Attorney Suzanne Sayward explains how your well-intentioned wishes may not come to fruition the way you planned.
 
The latest video from our Smart Counsel Series, held on Thursday, January 21st, was a presentation with Attorney Abigail Poole and guests Larry Dannenberg and Aaron Roberts of College Solutions on College Planning for your Child. Roberts and Dannenberg discussed how to identify the ideal college from an academic, social and financial perspective — not only for students who are at the top of their class, but also for students who are in the mainstream academically, have learning disabilities, or may possess special athletic skills. Attorney Poole discussed the importance of having your child execute a health care proxy, power of attorney, and HIPAA Authorization upon reaching the age of 18. This has always an important measure for your child to have in place, but it has become far more critical since the onset of the Coronavirus.

As always, please feel free to reach out to us with any questions, or ideas for future newsletter articles. And if you know someone who would like to receive this quarterly newsletter, please send us their email address, and don’t forget to forward this to your family and friends.
 
We wish each and every one of our clients a very happy, healthy and prosperous 2021!

Steven Joshua Samuel
Suzanne R. Sayward
Maria C. Baler

5 Ways in Which the Best Laid (Estate) Plans can go Awry
By Attorney Suzanne R. Sayward
 
When someone takes the time to create a Will or Trust that sets out their wishes for the distribution of their estate at death, they often experience a feeling of relief knowing that their assets will be distributed in accordance with their wishes. However, if the estate plan is not carefully crafted and then reviewed and adjusted from time to time, the intended results may not be achieved.

Read on for 5 ways in which the best-laid estate plans can be derailed.

1. Assets are distributed other than by way of the Will or Trust. In some ways, a Will is the “distributor of last resort.” For example, if you own assets jointly with another person, or if you designate a beneficiary to receive an account (‘pay-on-death’ or ‘transfer-on-death’), then those assets are not going to pass under your Will or Trust. If someone provides for specific bequests in her Will, such as $5,000 to my sister Jane or $1,000 to the Animal Rescue League, but has her children as joint owners or pay-on-death beneficiaries on all of her accounts, then those specific bequests will not be paid. Make sure you understand how your assets will be distributed and that you own your assets in a way that will achieve your distribution goals.
 
2. Taxes are not factored in – part 1. There are two types of taxes to be concerned about when planning your estate: income tax and estate tax. For the most part, inherited assets are not income taxable to the recipient. For example, if my aunty leaves me $50,000 in her Will, that is not taxable income to me. However, qualified retirement accounts such as IRAs and 401ks are an exception to this rule. If my aunty names me as the beneficiary of her $50,000 IRA, that will be taxable income to me. Consequently, I will not actually receive a $50,000 bequest; it will be diminished by the state and federal income taxes I must pay.
 
3. Taxes are not factored in – part 2. Estate taxes are imposed on the value of the assets that a person owns at death, and that are distributed to someone other than a spouse or charity. Currently, the federal law provides for a very large exemption from estate tax of almost $11.7 million per person. That means that if the value of a person’s estate is less than $11.7 million, there is no estate tax payable to the IRS. Massachusetts has its own estate tax system which allows for an exemption of $1 million dollars. If your estate is more than $1 million, be aware that the amount you will be passing on to your beneficiaries will be less than the full value of your estate. In addition to being aware of the tax liability, it is also important to specify in your estate plan who is going to bear the burden of the tax. For example, say you have a family business worth $2 million and other assets (home, investments, retirement accounts) totaling $2 million. Your daughter works in the business so in your Will you leave the business to her. Your Will then leaves the rest of your estate (the residue) to your son. There will be $280,000 of estate tax payable to Massachusetts. Who will pay that tax? Should it be borne equally by your children? If so, does the business have the liquidity to pay its share? Should the tax be paid entirely from the residue of your estate (the share going to your son)? What’s ‘fair’? Your estate plan should state your intentions.
 
4. Estate assets change over time and the estate plan is not updated. It is very important to review and update your estate plan from time to time because things change. This happens often with distributions of tangible personal property such as jewelry and collectibles. I have seen a number of situations where the Will or accompanying memorandum, leaves a particular piece of jewelry to someone but that item has been sold or cannot be found when the testator dies. It is particularly troublesome when the item cannot be located and no one has any information about whether it was sold or intentionally given away during the deceased’s lifetime – it’s in those situations that the finger-pointing begins…

5. The possibility that a beneficiary will predecease the testator is not factored into the planning. Your Will or Trust should include provisions stating what will happen in the event one or more of your beneficiaries predeceases you. For example, if you leave $10,000 to your grandchildren Gary and Caroline in your Will, what should happen to that bequest if Gary predeceases you? Should Gary’s share be distributed to Gary’s children? Should it be distributed entirely to Caroline? Should it lapse? 
 
These are just a few of the pitfalls that can derail your intentions for the distribution of your assets after your death. When you take the time to consider and decide how your estate should be distributed among the people you care about, make sure that your wishes are actually carried out at your death by working with an experienced estate planning attorney to create your Will or Trust, and then reviewing your estate plan with your attorney every few years. Happy planning!

Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit our website at www.ssbllc.com or call 781/461-1020.
Possible Tax Changes on the Horizon
By Attorney Maria Baler

Although predicting changes to the tax laws is a difficult game, the election of President Biden and Democratic control of the House and Senate have made it more likely that President Biden’s tax proposals may become law. Here are a few that may impact the world of estate planning:
 
●     The federal estate tax exemption, which is the amount you can leave to your heirs free of federal
estate tax, is currently at $11.7 million per person. President Biden proposes to decrease the
exemption to $3.5 million per person. Keep in mind that the law that gave us this high federal
estate tax exemption amount was enacted in 2017, and the exemption amount will automatically
revert to 2017 levels ($5.49 million per person, adjusted for inflation) in 2025 unless Congress acts
to extend the current law (and the higher exemption amount) and unless it is changed by Congress
before that time.

●     The lifetime gift exemption, the amount you can give away without paying gift tax during your
lifetime, would decrease to $1 million, from its current level of $11.7 million.

●     The federal estate and gift tax rate of 40% for assets/gifts over the exemption amount could
increase to 45%.

●     Currently, when a person dies, the deceased’s assets are valued as of the date of death. If stock,
real estate, or other appreciated assets are worth more at death than they were at the time of
purchase, any unrealized capital gains are wiped out, and the basis in the inherited asset for capital
gains tax purposes changes at death so that it is equal to the value at the date of death, without
any capital gains tax being paid. This is the so-called step-up in basis rule. President Biden’s
proposal would eliminate the step-up in basis at death and treat death as triggering capital gains
tax on all of that unrealized gain at the long-term capital gains tax rate.
 
It appears that these changes will not come in the near term, as the administration may wait for the economy to improve before moving these proposals forward. It is also unclear if these proposals would pass even a Democratic-controlled Congress. 
 
We will keep our eye on these proposals and keep you posted on whether there is any movement or change in what is proposed, and whether any of them ultimately become law, in what form, and when the change will take effect.

Ask SSB

January 2021 by Attorney Suzanne R. Sayward

Q:    What are the different kinds of trusts and why does it matter which one I have?   

A:    As with many seemingly simple estate planning questions, the answer is far from simple. There are many different types of trusts and the trust that is best for you depends on your particular situation and your goals. 

For example, if you have a child with disabilities, you will probably need to create a Supplemental Needs Trust, sometimes called a Special Needs Trust, to protect your child’s needs-based governmental benefits.  A Supplemental Needs Trust can be a ‘third-party’ trust or a ‘first-party’ trust, and you may need both. A third-party Supplemental Needs Trust can be revocable or irrevocable. The type of Supplemental Needs Trust that is best for you will depend on your circumstances.

If you want to reduce estate taxes payable at your death, there are a number of different types of trusts that may be suitable depending on your circumstances. Some examples include: credit shelter trusts for married couples, an irrevocable life insurance trust (ILIT), a grantor retained annuity trust (GRAT), a qualified personal residence trust (QPRT), or a gift trust, to name a few.

If your goal is to preserve assets from being spent down on future long-term care costs, an irrevocable income only Trust may be appropriate, or maybe a so-called ‘children’s trust’ would be better.

Perhaps you want to avoid probate at your death. A revocable living trust is the most common type of trust for that purpose.  Such a Trust is also likely to be an appropriate part of an estate plan for people who have young children or even young adult children.
There are thousands of books with hundreds of pages written about the various types of Trusts that can be used to achieve estate planning goals. The above are just a few examples of these. The best way to determine which type of trust is best for you is to meet with an experienced estate planning attorney to discuss your unique situation and your particular goals. 
 
What's New at Samuel, Sayward & Baler
 
Here's what's been happening at Samuel, Sayward & Baler LLC!
 
To ensure the on-going safety of our clients and staff, we will continue to meet with clients by video conference or telephone call for the foreseeable future. If you would like to schedule an appointment to meet with one of our attorneys by Zoom video-conference or telephone, please call our office.
 
Attorney Steve Samuel, who has been Of Counsel to Samuel, Sayward & Baler LLC for many years, plans to take a more active client-service role in the law firm in the coming year. At the end of 2020, Steve stepped away from Samuel Financial LLC, where he worked for the last 18 years as a financial advisor, though he was still of counsel to SSB. 

Steve’s focus will be serving as a Trustee and/or Attorney-in-fact (under a Power of Attorney), or advising individuals who serve in those roles; and advising clients about other legal matters. Steve can be reached at samuel@ssbllc.com or 781.461.1020.

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Smart Counsel Series Presentations
 
Our last Smart Counsel Series on Thursday, January 21, on Finding the Right College for Your Child was a great success! Larry Dannenberg, founder of College Solutions, along with his colleague Aaron Ladd, Managing Director for the Northeast, discussed how to identify the ideal college for your child. Significant changes have occurred in the college admission process in the last year due to the Coronavirus (COVID-19) pandemic and Larry and Aaron showed us how to effectively navigate these tricky processes. We recommend you share this video with your family and friends who have middle school-/high school-aged children.

Welcome Deb Hayes
We are pleased to announce the recent hiring of Debbie Hayes to the position of Law Office Administrator. Deb comes to us from Ronald Trahan Associates, where for almost 25 years, she distinguished herself an executive operations administrator, team leader and “glue” for this international public relations firm. Additionally, Deb is a very active member of the Millis Lions Club and served as the eastern Massachusetts District 33K Governor for Lions Clubs International from 2019-2020. Deb has a BS/MS in Business Administration from the University of Phoenix, has lived locally all her life, and has two adult children. Deb’s passions are traveling, volunteering, playing cards and spending time with family & friends while enjoying a great red wine.
Well Wishes to Attorney Julia Abbott
The partners and staff of SSB would like to wish Attorney Julia Abbott all the best as she leave SSB and moves on to the next phase in her legal career.
SSB Staffers enjoy a fun, “virtual” holiday party.
On December 18th, the partners and staff got together virtually to enjoy each other’s company and share some holiday cheer. The team played holiday trivia and “2 lies and a truth” – a fun, getting to know your teammate game where you share a something that no one knows about you, mixed with two lies about you. It was great fun finding out that Attorney Baler recorded an album, Kenzie loves all things pasta and Cait lived in Germany for several years.
SSB is GROWING!  Over the next month or so, SSB will be adding several new staff members to support our ever-important clients. Check our website in the coming weeks to meet our new team members.
These articles are not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.