Life Estate Deeds – An Antique Technique Providing Modern Convenience

October 16, 2014

Filed under: Estate Planning,Financial,Uncategorized — Tags: , — Alexis @ 9:30 AM

When we pass away, our assets are divided into two groups – probate and non-probate. Non-probate assets are things like bank accounts and life insurance policies that you have named joint owners or TODs on – they transfer to the named beneficiaries upon your death without any court involvement. Probate assets are held only in your name. The court looks to your will, or the intestacy statute, if there isn’t a will, to determine who receives these assets. This can be a lengthy, and potentially costly, process.


One way to make your home a non-probate asset is to create a life estate. This concept was borrowed from old English property law. You, as the owner of the home, deed the home to yourself for life (making you the “life tenant”) and then to another person(s) known as the “remainderman” (most often your children). Upon your passing, the remaindermen immediately become the owners of the home (they just need to file a copy of your death certificate with the Registry of Deeds).


Creating a life estate has many benefits. First, upon your passing, your home transfers seamlessly to the remaindermen without any court involvement. Second, you are guaranteed the right to remain in your home for the rest of your lifetime – you cannot be compelled to sell or move out. Next, after your passing, the remaindermen receive a step-up basis for capital gains purposes, minimizing the capital gains tax due should they decide to sell the property after your death. Fourth, because the remaindermen have no ownership interest in the home until after your death, their creditors (in the event of a bankruptcy or divorce, for example) cannot access the equity in the home during your lifetime. Lastly, the entire value of the home can be protected from your nursing home costs so long as the life estate is created at least five years before you ask MassHealth for assistance in paying for nursing home care (more on this below).


Creating a life estate, however, has its potential pitfalls. First, the remaindermen must all sign off if you decide you want to mortgage, reverse mortgage or sell the property. The thought of giving up so much control can be frightening for many homeowners. (It’s worthwhile to note that your remaindermen should have their own powers of attorney in place, in the event you need their approval and they are out of the country, in the hospital, or otherwise incapacitated.)


Also, if you need to ask the state for assistance in paying for nursing home care in the five years following the creation of a life estate, you could be disqualified for a period of time. MassHealth uses a formula to calculate the “value” of your life estate based on your life expectancy and the value of the home. The disqualification can also be cured if the remaindermen agree to deed the property back to the life tenant outright, destroying the life estate. If it’s likely that you’ll be asking MassHealth to help pay for your nursing home care in the next five years, then you should meet with an elder law attorney to explore other options to protect the value of your home to the greatest extent possible.


A life estate deed can be a valuable addition to your estate plan. If you’re interested in learning more about life estates and whether this might be the right solution for you, call our office to schedule a planning session.

Can A Trust Benefit Your Family?

December 15, 2010

Filed under: Estate Planning — Tags: , , — Alexis @ 9:04 AM

Most Americans don’t realize that they have an estate.  Most people think that an “estate” includes a mansion in the hills, a private jet, or millions of dollars in investment accounts.  But the true definition of “estate” is a person’s possessions or property—regardless of the size or amount.  Everybody has an estate; and if you own a home, have a retirement account, or have any personal property of value you should consider creating a trust for your “estate.”

Before you scoff that you aren’t wealthy enough to need a trust, consider that there are many different kinds of trusts, each of which may be used for specific situations.  Some trusts are complicated and extensive, created by wealthy families to preserve assets through generations.  Other trusts are simple and to the point, created by young parents to ensure that their minor children will be provided for.  What kind you will need will depend on a number of factors, including the size of your estate, your goals for that estate, the age of your children, your marital status, whether you have a special needs child or grandchild, and many, many more.

Most trusts created for estate planning purposes are revocable living trusts (or RLTs).  An RLT is a document created not simply to distribute your property, but to own your property during your lifetime, to be invested and spent for your benefit or the benefit of your named beneficiaries.  As such, a trust takes effect as soon as you sign it, and your property is protected by it, as soon as you place your assets in the name of your trust.  There is a lot of flexibility available with a revocable living trust, and yours can be created to fit your unique situation.  Most RLTs name the trust creator (you) as the initial trustee, nominating individuals or banks to take over as trustee when you become incapacitated or pass away.

One of the primary benefits of a trust is that when you pass away, property is not merely distributed and that’s the end of it; you can instruct the trustee to distribute the money slowly and in any number of ways, for example, keeping it out of the hands of a spendthrift child or protecting it for the benefit of a special needs child.

You may not have a Back Bay penthouse or an Italian villa, but you do have a family to protect.  We’d like to help.  Contact our office to find out if your family needs a trust.

4 Essential Qualities Your Executor Should Have

December 1, 2010

Filed under: Estate Planning — Tags: , , — Alexis @ 9:44 AM

If you have a Will, you have an executor. You are placing a lot of trust in your executor. After all, this is the person who will be serving in your stead when you pass away—helping your loved ones, overseeing your finances, paying your final bills and distributing your property. Serving as someone’s executor can be a tough job, and choosing the right person for that job can be just as difficult.

Although it is commonly considered an honor, serving as an executor is a lot of work, and often requires a great capacity for organization, attention to detail, meeting deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.

Keeping this in mind, here are four qualities to consider when choosing who will serve as your executor:

1. Is the person trustworthy? Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
2. Is this person organized? The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, meeting court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
3. Is this person financially savvy? One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
4. Is this person compassionate? Although probate can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.

Part of the estate planning attorneys’ job is to help you think through who among your family or friends would be best suited for the job. If you have any questions at all about who to name, make sure to bring it up with your attorney.

Sometimes the Best Thing is to Do Nothing at All

March 15, 2010

Filed under: Estate Planning — Tags: — Alexis @ 2:23 PM

Clients came in a few months ago explaining that several years back, the mother had deeded her house into a trust and now she wanted to make a change to the trust. I said that I would review the trust to be sure that such a change would be permitted and would advise them on how to proceed.

As I dug into the trust, it turned out to be quite a doozy. It was poorly drafted. It was clearly put together by someone who didn’t understand the intersection of estate tax planning, Medicaid planning, property law, and fulfilling a mother’s wishes. It took me weeks of research, several pages of notes, and a lot of head-scratching to finally put together a 5-page letter to the client explaining her options for moving forward.

I often say that elder law and special needs planning involve juggling a lot of different balls and that we will never be able to get them all to land in a perfect line. It’s a matter of choosing which of the many issues are most important to you and letting the other ones slide into second place.

In this case, the clients and I reviewed the pros and cons of all of her options. Because of the poor drafting of the original trust, we were very limited in what we could do. If we did A, she would achieve B, but she would lose C. If we did B, we would achieve C, but lose A, and so on. The client weighed all the different things that she had hoped to accomplish and chose the one that was most important to her. And to accomplish that particular goal, the required action was to do nothing.

In the end, she walked out of my office with the same trust document she had when she came in – we didn’t change a thing. But she now has something else – knowledge. She now understands, much better than she did from the attorney who drafted the trust years ago – what will happen to her home if she wants to sell the house and move, what happens if she ever needs nursing home, and who in her family will inherit it after she passes away.

Sometimes, after examining all the angles, you realize that the best thing to do is to do nothing.

More Reasons to Write up a Caregiver Contract

November 13, 2009

I’ve been writing a lot about caregiver contracts lately. That’s because they represent the ideal solution for so many families.

Many children become part-time or even full-time caregivers for their aging parents. Sometimes a child needs to be paid for this – usually that is the only way she can afford to leave her job in order to stay home and care for Mom. And in some families, the parent insists on paying the child, or at least contributing to groceries and utilities – because she doesn’t want to feel she is taking advantage of anyone or being a burden.

Earlier posts describe why a written caregiver contract is important to prepare for the possibility of a future MassHealth nursing home application, but here is something that would apply more immediately:  in addition to drafting a good contract, an elder law attorney will also set the family up with a payroll service that will make sure the child receives the benefits of an employee. Namely, the child will have two special protections.

The first is worker’s compensation coverage. Have you ever helped a frail elder with a shower? How easy is it to hurt your back? Very. With a proper caregiver contract arrangement, that child can collect worker’s comp from her injury.

The second protection is the unemployment benefit. Sometimes, no matter how good a job a child does of keeping Mom at home, there comes a time where the care Mom needs exceeds what the child can provide, and she must move to a nursing home. Now the child is unemployed.

For so many families, paying a child to care for the parent is the best solution. Having informal, unwritten understandings is typical, but leaves both the parent and child open to too many pitfalls. By working with an elder law attorney to craft a good caregiver contract and to set up a payroll service to take care of the deductions and taxes, both the parent and child will be much better protected in the long run.

Howard Gleckman’s Caring for Our Parents

October 23, 2009

I’ve been reading Howard Gleckman’s book, Caring for Our Parents, in which he examines the long-term care system of today and the future. Essentially, if we keep on doing things as we are now (expect people to use up their savings to stay at home or in assisted living, have Medicaid pay for nursing home – with a few other public programs thrown in here and there), then the elderly of the next few decades are in for quite a shock.

My conclusions are these:

1. Write a Health Care Proxy and a Medical Directive, or Living Will My version of this is to give clients Your Way, a fantastic workbook that helps you spell out to your family what care you would want in various end of life situations. Long-term care is astonishingly expensive, as you know if you are currently coordinating at-home care or other support for your parents. If you don’t want that kind of money spent on you – if you don’t want certain procedures done or decisions made – tell your family now. During an emotional crisis, it will be very difficult for them to turn down a medical option without you having previously given them that moral permission.

2. Get thee to a financial advisor. The current long-term care system depends in large part on the consumer paying her own way. The Boomers are notorious for not saving money. Work with an advisor to see what kind of cushion you can build up.

3. Get involved in politics at the grass-roots level. As currently structured, the Social Security, Medicare, Medicaid, and long-term care insurance systems are projected to crash in on themselves. Additionally, Boomers don’t have the numbers of children that their parents do to share the workload. Your parents will be OK – an elder law attorney can help them stretch out their assets to stay at home for as long as possible. But the Boomers will not be OK. The system needs to be overhauled, dramatically. I don’t have answers, but Gleckman outlines the models that some other countries use. I’m sure there are other brilliant policy makers in the US coming up with excellent ideas, as well. But ideas become law only if the Boomers use their sheer numbers to push the system to provide the care they expect. Without big change, the Boomers will be in for quite the surprise in their frail old age.

Howard Gleckman’s New Book: Caring for Our Parents

August 25, 2009

Filed under: Estate Planning — Tags: , , , , — Alexis @ 5:27 PM

Driving to work on Friday, I had the treat of listening to NPR’s Robin Young interview Howard Gleckman on his new book, Caring for Our Parents: Inspiring Stories of Families Seeking New Solutions to America’s Most Urgent Health Crisis. I only caught the end of the interview, but it was so reassuring to hear him close with this message: we should all have our health care proxies and end of life wishes in order.

This is what I talk about when I give presentations and when I meet with clients. I’ve blogged about it – read about health care proxies here and about end of life wishes here.  This is such an important message to get across to people. A health care proxy lets someone else make health care decisions for you when you cannot make or communicate them yourself – anesthetic fog? dementia? shock from an accident? Without a health care proxy in place, your family could very well be forced to go to court and waste a lot of money, time, and emotion.

And making your end of life wishes clear will save your family a tremendous amount of anxiety, guilt, grief, and arguments. Give your family the gift of peace by taking the burden off of their collective shoulders – tell them ahead of time what you would want in a difficult situation.

It gives me hope to hear Mr. Gleckman advising a national audience to get their health care proxies and end of life statements in order. So many families would have such an easier time caring for their loved ones with these documents in place.

End of Life Wishes & Living Wills

Clients are always asking about living wills. Massachusetts law does not recognize a living will, and it’s also impossible to write a thorough, well balanced statement of your end of life wishes in just a few paragraphs.

I provide clients with a solution to their goal, but in a much better form. I give my clients a workbook called Your Way. It is published by a nonprofit in California, H.E.L.P.: Helping People Meet Aging-Related Legal & Care Challenges.

This workbook is twelve pages long and very thoughtfully walks the reader through various scenarios you could confront in an end of life situation and what kind of comfort and care you would like to receive. For example, what matters to you the most – being with friends and family? Listening to music? Being able to help dress yourself? Under various scenarios, would you want curative care or to be kept comfortable? Who do you want with you as you are dying? Where would you want to be? A twelve-page work book written by heath care professionals does a much better job elucidating your wishes than an attorney can do in a one-page living will.

If you are not a client of this office, then log onto the Your Way website and order a workbook. If you are my client, then you already have a copy. Complete the exercises and give your family the gift of knowing exactly what you would want them to do in a crisis situation.

My Spouse Died – What Do I Need to Do to Protect Myself?

July 24, 2009

After a spouse dies and the family gets through the funeral, the immediate concern is to square away the couple’s assets and make sure the surviving spouse has enough to live on. After that, there is one more step to take: protecting yourself.

One area where you need to be proactive is to consider who will be able to assist you with financial and health matters if you become ill or incapacitated. Before, you and your spouse relied on each other to serve in these roles. Now you need to legally appoint someone to be able to step in and help you. At this point, you definitely need to execute a Durable Power of Attorney and Health Care Proxy. And many people like to add a child to their bank account so she can easily help with paying bills. See my blog post on how to do this appropriately (don’t add her as a joint owner!).

If you go to see your elder law attorney after your spouse has passed away, in addition to helping you transfer your spouse’s assets to your name, she will also help you put in place these fundamental documents that will serve to protect you, should you ever become unable to handle your affairs or medical decisions yourself.

Don’t Add Your Child as a Joint Owner on Your Bank Account

May 22, 2009

Filed under: Estate Planning — Tags: , , , — Alexis @ 1:37 PM

So many clients tell me that they want to add a child to their bank account so that the child can help them pay bills and manage their finances, and also so someone will have access to the bank account should anything happen to the parent. I agree – but I don’t agree with the bank’s usual approach which is to just name a child as joint owner and send the customer on her way. 

Naming a child as a joint owner is dangerous. A joint owner has complete rights to the full amount of money in that account. If your daughter wants to withdraw it all, move to Aruba, and never speak to you again, she is well within her rights to do so – the bank can’t stop her. If she gets divorced, gets in a car accident, makes a bad business deal – that money is on the table and you had better believe the opposing attorney will chase after it. “Not fair,” you cry. Technically, there are laws to deal with these scenarios, but it is much easier to avoid them to begin with. 

Don’t let the bank tell you to name a joint owner. Instead, patiently explain your two goals: (1) someone should be able to help with your account while you are living, and (2) someone should have access to the account after your passing (ex. to pay final bills or for a funeral). To accomplish the first, the bank can add your child under a Durable Power of Attorney. I acted as Power of Attorney for a client who had no family, and his checks were printed: “George Clooney, Alexis Levitt, IFF.” I was on the account, but clearly as a Power of Attorney and not a joint owner.

As for the second goal of allowing access to the account after your passing, there are several ways to do this. Some banks list a “beneficiary,” others use “payable on death to,” some use “in trust for.” Note that if you name someone as Power of Attorney, their authority ends at your passing, so you need this second category listed on your account, as well. (And this has the added bonus of allowing this account to pass to a beneficiary without going through probate.)

This will take persistence on your part, and you may have to insist on working with a manager. Most customer service folks at the banks only know to offer you the option of joint ownership.

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