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Legal Notes

Attorney Seunghee Cha; Bulkley, Richardson and Gelinas, LLP; Hadley, MA; 413-256-0002Attorney Seunghee Cha; Bulkley, Richardson and Gelinas, LLP; Hadley, MA; 413-256-0002A common estate planning goal is smooth administration of one’s affairs in incapacity and at death. People often create a joint bank account adding another person, typically a spouse or an adult child, so the other account holder can assist with bill paying and have uninterrupted access to the account for funeral and other expenses. 

Make your intent clear: it can make a world of difference.

Joint bank accounts have two key attributes: (1) the owners have equal ownership and access to the account, and (2) the survivor automatically becomes sole owner of the funds upon the death of the other owner. Such survivorship facilitates transfer of the account without the need for  probate. In many families, the arrangement is sensible, but beware of these drawbacks, particularly when the other joint owner is not the spouse:  

∙ Each owner has the power to withdraw everything, meaning the account could be cleaned out without notice. 

∙ The account can be exposed to each owner’s creditors, who can claim rights over the joint account. 

∙ If you intend to leave your children an equal inheritance, remember that the joint  account passes outside of your estate. Only the surviving owner is entitled to that account. 

Consider Mary’s story: A widow, she adds her son, John, to her bank account. John assists Mary with bill paying, including prepaying for her funeral. At Mary’s death, the account holds proceeds from Mary’s condominium, sold well over a year ago. Mary’s bills and administrative  expenses turn out to be modest. John and his wife resent Anne, his sister, for not doing enough to help Mary in her last year of life and believe that John deserves to keep all the money in the account. Anne insists that her mother intended her children to receive equal shares from the sale of the  condominium. If they cannot resolve the issue, the siblings may be headed to court, with Anne having the burden of proving Mary’s intent to overcome the presumption of John's survivorship of the account. Regardless of the outcome of the case, the siblings likely will not speak to each other again. 

If you want the benefits of a joint account to facilitate your affairs, you should discuss the arrangement with your family to avoid misunderstanding. It is advisable to memorialize the purpose of the account, indicate whether the arrangement is for convenience only, and state its intended disposition by a signed writing, including whether the remaining fund is a gift to the surviving account holder. It would be prudent to have the joint owner acknowledge the writing in the presence of a witness and a notary, especially if the account holds or could potentially  hold a lot of money. Make your intent clear: it can make a world of difference.

In August of 2020, during the first wave of COVID-19 cases, I advised readers to review their medical advance directive documents. These documents could contain language that prohibits intubation and/or use of a ventilator in all situations. Allowing intubation and ventilator use can be life-saving for some COVID-19 patients. There have been a few variants since the first wave, the latest being the Omicron variant, so this advice is still necessary.

Medical advance directive documents include the Massachusetts MOLST Form, Living Wills also known as Advance Directives, and the Massachusetts Health Care Proxy.

The MOLST Form and Living Will are primarily used for end-of-life decisions. MOLST stands for Medical Orders For Life Sustaining Treatment. It is a medical document best suited for persons who are medically frail, have an advanced illness, a progressive illness, or a very serious injury.

One issue concerning COVID-19 and these documents is that many of the documents may contain language that prohibits intubation and/or use of a ventilator.

Living Wills, also known as Advance Directives, are not legal documents and not legally binding in Massachusetts. They are, however, strong evidence of a person’s intentions as to the withholding or withdrawal of treatment for end-of-life decisions at any age. A Living Will or Advance Directive gives the health care agent named in your health care proxy clearer directions on your wishes of how to act on your behalf regarding these medical decisions.

The Massachusetts Health Care Proxy is a legal document. The Massachusetts Health Care Proxy law allows individuals to prepare a document naming a health care agent to make their medical decisions for them should they ever become incapacitated and therefore unable to make their own medical decisions. A Health Care Proxy is strongly recommended for every person age eighteen and older. If a legal adult becomes incapacitated with a serious illness or injury and is unable to make medical decisions and has not signed a valid health care proxy, a court proceeding appointing a legal guardian is necessary to make those medical decisions.

One issue concerning COVID-19 and these documents is that many of the documents may contain language that prohibits intubation and/or use of a ventilator. Every medical case is different, and patients do survive COVID-19. When many people first signed these documents they envisioned prohibiting intubation and ventilator use because they did not want to unnecessarily prolong their life in situations where there was a very low chance of recovery or there would be poor quality of life with survival.

Another issue with these documents is the appointed health care agent’s communication with medical staff. During COVID-19 surges, communications with medical staff sometimes can only be by telephone and electronic means. Many pre-COVID-19 medical advance directive documents may not contain clauses that would also authorize communication with medical staff solely by telephone and/or electronic video communication and also allow signing documents by electronic means.

Review all your medical advance directive documents to make sure they express your intentions for all medical situations and to assess if you want to change or add an addendum to these documents to allow any exceptions because of COVID-19.

Attorney Seunghee ChaAttorney Seunghee ChaGun Trusts

The last article in this two-part series addressed the importance of proper management of  firearms when a gun owner becomes incapacitated or dies. This article discusses gun trusts as  an effective solution. 

John owns a collection of antique rifles passed down from his father. He names Daughter in his will as personal representative. Daughter wants nothing to do with his firearms; nor does she approve of her minor children inheriting them. John wants to leave his collection to Daughter, and he hopes the grandchildren will grow to appreciate the heirlooms, some of which are valuable. How can a gun trust help him? Here are some major benefits.  

Prevent unlawful possession of firearms. It is unlawful for an incapacitated person to own firearms; if such person’s relative or attorney-in-fact takes possession of them, they are in  danger of committing a crime. A gun owner’s death presents the same peril. With firearms held  in a trust, the trustees can ensure continuity of lawful ownership.

It is unlawful for an incapacitated person to own firearms; if such person’s relative or attorney-in-fact takes possession of them, they are in  danger of committing a crime.  

Select suitable trustees. Trustees knowledgeable about gun laws, such as permit, background check, notification, and licensing requirements, can take possession of firearms and ensure their  proper use, transport, and transfer. A gun trust is particularly useful for weapons classified under the National Firearms Act, which can be transported only by the registered owner.  

Facilitate orderly transfer. The trust can prevent disqualified beneficiaries [e.g., unlawful users of controlled substances (marijuana is illegal under federal law)] from inheriting firearms and can set appropriate times for certain beneficiaries, such as minors, to inherit them. In case a  beneficiary fails the background check required to take possession of a firearm, it is important to name contingent beneficiaries.  

Avoid probate of firearms. Firearms held in a trust are not subject to probate. Although probate is usually not onerous in Massachusetts, some gun owners and their families prefer to skip court procedures and preserve the privacy of gun ownership.  

John establishes a gun trust to hold his firearms and retains ownership as co-trustee with Nephew. If John becomes incapacitated or dies, Nephew continues to manage the firearms as trustee. The trust incorporates John’s wishes: certain rifles remain in trust until the grandchildren mature and choose to accept them; others must be sold with the proceeds distributed to Daughter. John keeps Daughter as personal representative to administer all other aspects of his estate.  

If you own guns, you have a great responsibility to ensure their appropriate possession and use  for the safety of your family and community at large. Your estate plan should include careful instructions for how your guns are managed in the event of your incapacity and death.

Attorney Seunghee Cha; Bulkley, Richardson and Gelinas, LLP; Hadley, MA; 413-256-0002Attorney Seunghee Cha; Bulkley, Richardson and Gelinas, LLP; Hadley, MA; 413-256-0002What to Do When a Gun Owner Is Incapacitated or Dies

According to a recent Gallup poll, over 40% of the U.S. population lives in a household with at least one firearm. If you own a gun or live in a household with guns, you probably know the rules. Or you may not own guns or know much about them; however, if you are a fiduciary for a gun owner, such as an agent under a power of attorney or personal representative of a decedent’s estate, you need to know how to properly possess, transport, transfer, and dispose of firearms under federal and state laws.

According to a recent Gallup poll, over 40% of the U.S. population lives in a household with at  least one firearm.

Two primary federal laws that fiduciaries must comply with are the Gun Control Act of 1968 (CGA) and the National Firearms Act (NFA). Both laws are enforced by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Some of the rules are as follows:

  • It is unlawful to receive or possess certain unregistered firearms, which are contraband and cannot be registered later by the personal representative. Violations are felonies subject to fines and imprisonment.
  • It is unlawful to knowingly transfer firearms to prohibited persons (e.g., felons and drug addicts) and for such persons to receive firearms.
  • You must obtain a federal firearms license (“FFL”) for the sale and purchase of firearms; firearms that travel across state lines must be transferred using an FFL dealer.

State laws also govern gun ownership and dealings. Under Massachusetts law:

  • Firearms must be stored in a locked container or with a tamper-resistant locking device.
  • You must be licensed by the Commonwealth to own, transport, transfer, purchase, or sell firearms.
  • Residents who sell, transfer, inherit, or lose firearms must report the sale, transfer, inheritance, or loss of firearms to the Department of Criminal Justice Information Services Firearms Records Bureau. Any loss, theft, or recovery of a firearm must be reported to the state and local police departments.

To ensure proper handling of firearms, personal representatives should address the following responsibilities (generally applicable to any fiduciary):

✔ Ascertain if the decedent owned guns and whether any are unregistered. If you are unsure, call the ATF.
✔ Review the decedent’s estate plan regarding the disposition of firearms to identify who inherits them. Are the beneficiaries legally permissible transferees?
✔ Determine the type of firearms and transfer requirements.
✔ Secure and transport any firearm found in the decedent’s home. If you cannot safely do so, contact an FFL dealer.

In Part Two of this series, we will explore gun trusts as effective tools for management of firearms to help gun owners, fiduciaries, and beneficiaries navigate and comply with laws.

Picture of a house in the fall with a treeMany homeowners, as they get older, convey their real estate to family members and retain a life estate. When they create a life estate deed they no longer are the sole owners of the real estate and will then own what is known as a life estate interest, and the person or persons they conveyed the real estate to will own what is known as remainder interest. The owner or owners of the remainder interest only obtain full title ownership to the property on the date of death of the owner of the life estate interest.  When owners of life estate interests are still living, they are responsible for expenses such as real estate taxes, insurance, repairs, and maintenance and upkeep of the real estate. Sometimes the owners of the remainder interests will contribute their own funds, if the life estate tenant is no longer able to afford the upkeep and expenses, or is unable because of physical or cognitive decline.

The insurance company denied coverage for the loss of the real estate because the niece was not the named insured on the policy. 

Transfer on death deeds, which Massachusetts does not have, are similar to life estate deeds only that on the date of death full ownership transfers to the person or persons named to receive the property.  One of the main differences of a transfer on death deed is that the property owner retains full ownership until the date of death, unlike the split life estate interest/remainder interest ownership of a life estate deed. There was an interesting Minnesota Appeals Court case decided in February, Strope-Robinson v. State Farm Fire and Casualty Company,  Case No. 20-1147, regarding insurance coverage on a transfer on death deed.  The decedent in this case had homeowners insurance on the property in his name alone.  On the date of his death his niece, to whom he transferred the real estate, did not obtain insurance in her name.  A few days later his former wife burned down the house.  The insurance company denied coverage for the loss of the real estate because the niece was not the named insured on the policy.  The administrator of the estate sued the insurance company, but the court took the side of the insurance company.

This case brings up an important issue of continuous insurance coverage in case of any type of loss with a life estate deed.  Check with your insurance agent or company for their policies and requirements for named insureds with life estate deeds, and continuing coverage when the life tenancy ends.  Perhaps the insurance company may require that the remainder owners be on the policy as additional insureds.  The remainder interest owners being on the policy as additional insureds would also ensure that if the life tenant owner failed to continue coverage, they would be notified and could take action to maintain coverage on the property.