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Legal Notes

Revocable Living Trusts

Pam OddyAttorney Pamela OddyRevocable Living Trusts are a nifty device to avoid probate, to provide continuity of ownership and to protect the person who establishes the Trust. Anyone who is trying to establish an estate plan or who already has an estate plan but is looking to review it should seriously consider the benefits of a Revocable Living Trust.

It is called a Living Trust because it is drafted and becomes effective while the person is alive (hence, living) and it may own certain assets such as real estate or checking and savings accounts as well as some stock portfolios. Oftentimes, when the trust is drafted, the home is the most common asset that is deeded into the trust. However, vacation homes and bank accounts, including Certificates of Deposit, may be owned by the Trust as well.

The person who establishes the Trust (the settlor) is often the Trustee and the beneficiary. For tax purposes, it is a grantor trust so that any income tax deduction that the settlor received prior to the establishment of the Trust may still be claimed on the settlor's individual tax return. In other words, the Trust does not require its own separate tax identification number nor does it require its own tax return.

Succession is built into the Trust so that it is clear who becomes Trustee if the initial trustee/settlor dies or becomes incompetent. The Trust also has provisions that define how and to whom and in what proportions the trust assets are to be distributed after the death of the settlor. As part of the overall estate plan, a settlor's Will is often re-drafted to state that all assets are left to the Trust. It is called a "pour over'' Will.

The Trust is revocable so that the settlor may change the terms of the Trust, including who the successor trustee is as well as the beneficiaries. The Trustee may also add assets to the trust at any time.

There is a lot to like about this type of trust including the fact that the Trustee is in complete control of the trust and assets that are owned by the Trust avoid probate and pass on to the person(s) named as the beneficiaries in the Trust.

The most serious drawback of this Trust is that the assets owned by the Trust count toward the asset limit for most needs-based public benefits, including MassHealth.  If more than $2,000 is owned by the Trust, a person could not qualify to receive MassHealth benefits.

However, it is still worth exploring this trust with an attorney with estate planning expertise to ascertain whether or not it would be beneficial.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Your rights if a creditor sues you

CLA logo slogan 01It can be terrifying to be served with court papers because you owe money. Most often these lawsuits are brought by a credit card company or collections agency in a small claims session of a District Court. The first thought is – I need a lawyer. But there are steps you can take to protect yourself, and this article will explain those steps. If you have access to a computer in your home or at your local public library, you can get more details at www.masslegalhelp.org/consumer. Please note, however, that when you owe certain debts such as child support, taxes, alimony, or criminal fines, the protections described below are not available.

First, make careful note of dates on the first court papers you get, called a Summons and Complaint. The Complaint will list who is bringing the lawsuit against you (called the plaintiff) as well as the amount of money they say you owe. The Summons will state the number of days you have to provide a written response to both the plaintiff and to the courthouse (called an “answer”) and it may give a date to go to court. It is essential that you go to court on the date given even if you do not have the money to pay the debt. If you do not go to court, a default judgment will be entered against you; that is, you will automatically lose (and it will be hard to undo the results).

The Court looks at your income and assets to determine if you can be ordered to make payments out of your income or to sell an asset to pay the judgment against you. If all your income and property (“assets”) are protected, you are “collection proof” regardless of age or disability status and you cannot be ordered by the court to make payments to satisfy the debt. Payments by the Social Security Administration (SSA), unemployment compensation, and state and federal veterans payments, for example, are “exempt” income (meaning a court cannot order you to pay a judgment using those benefits). Other types of income, such as wages, are not exempt but are protected from collection up to a certain amount. Other amounts of income, if not already protected as exempt or up to a certain amount, can be protected because they are used for a “special purpose,” such as paying your rent.

If you are age 60 or over or a person with a handicap, state law further protects you from collection lawsuits if you only receive exempt income and own exempt property. In both situations it is your responsibility to gather the documents that prove you qualify for this protection and to bring them to court. To establish your age, a birth certificate, driver’s license or state ID will work. If you are under age 60, you have to establish that you are “handicapped.” If you receive payments based on disability (Supplemental Security Income [SSI] and/or Social Security Disability Insurance [SSDI]), a letter from the Social Security Administration should be sufficient to establish “handicap.” If you do not get payments from the SSA based on disability, a letter from your physician stating that you have physical and/or mental impairments that severely limit or prevent you from participating in at least one major life area may be used to establish your handicap and right to protection from a collection lawsuit. Major life activities are breathing, walking, talking, hearing, seeing, sleeping, caring for one’s self, performing manual tasks, and working as well as major bodily functions.

Exempt assets (that is, property that you own) for elders and individuals with disabilities include one car (up to $15,000 in wholesale retail value) and one’s home to the extent the Massachusetts homestead law protects it. The homestead law protects your home if it is your primary residence. If you file a declaration of homestead at the Registry of Deeds you can get increased protection for the equity in your home, above the automatic protection of $125,000. Manufactured (mobile) homes are also protected by this law.

If you believe you qualify as age 60 or over or as “handicapped” and only have exempt income and assets, you may choose to contact the lawyer representing the company suing you (or the person suing you if there is no lawyer involved). It doesn’t hurt to let them know that you are protected from the lawsuit because of your age/handicap and lack of nonexempt income/assets and that the court will dismiss the case so it is most efficient for all involved for them to dismiss the case now. Be aware, however, that even if they say they will dismiss the case, you will want to confirm with the court that the case has been dismissed. ALWAYS GO TO COURT ON A COURT DATE unless you have confirmed with the court that your hearing is not happening.

If you have further questions about a new or pending collections action against you, you can contact the Massachusetts Senior Helpline at 800-342-5297, Monday through Friday, 9 a.m. to 12 p.m. They can provide advice and written materials; they do not provide representation by attorneys.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Seunghee ChaAttorney Seunghee Cha

Planning for a funeral

Funeral planning eases the burden on loved ones of making arrangements in a time of grief. This article provides guidance on options and some basics you should know.

Funeral trust

You can purchase a “pre-need” funeral contract from a funeral establishment, which must deposit the payment in a trust account of a Massachusetts bank. A trustee manages the account and upon your death the funds pay for goods and services included in the contract, such as basic services for arranging logistics, cremation/embalming, and burial.

Funeral Life Insurance Policy or Annuity

Some funeral establishments offer life insurance and annuities specifically to pay for pre-need funeral contracts. Anyone selling such products must comply with all state and federal laws and regulations governing the insurance industry, including licensing requirements.

Bank account

You can open a separate account to defray the cost of funeral expenses. The account is in your name and is labeled as a “burial” account.

Veterans

Massachusetts Veterans’ Memorial Cemeteries are located in Agawam and Winchendon. No fee is charged for the funeral of an eligible veteran, and a nominal fee is charged for spouses, widows and widowers, and qualified dependents.

Organ donation

You must obtain a donor card from the Registry of Motor Vehicles. Only you can register to become a donor — someone else cannot do it for you.

Green burial

With a national conversation growing about “good death,” so is interest in environmentally conscious, green burials. Communities in our area where green burials are allowed include Chesterfield, Conway, Shutesbury, Wendell, Amherst, and Westfield. Local town/city clerks issue permits and provide guidelines for documenting the death and lawful possession, proper handling, and transport of the body.

YOU HAVE THE RIGHT TO…

  • Cancel a pre-need funeral contract, including the type funded with life insurance or annuity, within 10 days of signing without penalty;
  • Receive a written price list of goods and services offered;
  • Receive price information on the telephone (without disclosing your name and contact information);
  • Buy goods and services separately: you need not buy a package;
  • Use an alternative casket or urn for cremation without paying an extra fee.

SHOP AROUND, ASK QUESTIONS, GET IT IN WRITING.

  • What happens if the funeral establishment goes out of business?
  • What happens if you move or die while away from home?
  • Itemized list of goods and services;
  • Cancellation policy, commissions, and fees.

PRACTICAL TIPS

  • Make funeral instructions easily accessible by family after your death.
  • Joint ownership of burial accounts permits ready access by the survivor.
  • Organ donors should make an alternative plan in case the body cannot be accepted.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Planning for the unexpected in your estate plan

Just after Christmas 2016, the day after the actress Carrie Fisher passed away, her mother, the actress and entertainer Debbie Reynolds, unexpectedly passed away. There is no public information about Debbie Reynolds’s estate plan, but if she had a Will and her daughter Carrie was named as a beneficiary, there is a lesson learned from this situation about how an unexpected death of a beneficiary named in a Will affects that distribution.

Massachusetts General Laws has an antilapse statute, M.G.L., c. 190B, Section 2-603. This statute states that if a beneficiary named in a Will is a grandparent or lineal descendant of a grandparent (a child, grandchild, parent, sibling, niece or nephew,  uncle or aunt, cousin, etc.) and that person predeceases you, then that relative’s share will then pass to his or her issue (their child or grandchildren) and not lapse. If Debbie Reynolds resided in Massachusetts and drafted a Will under Massachusetts laws that named her daughter Carrie Fisher as a beneficiary in her Will, then Carrie Fisher’s legacy would not lapse and it would then pass to her child unless the Will stated otherwise. 

In most cases having the child or children of a deceased lineal descendant of a grandparent receive that predeceased beneficiary’s legacy in a Will is the desired outcome anyway. In some cases, however, it may not be the desired outcome or even in the best interests of the beneficiary. You may not want the child or children of this deceased beneficiary to receive the legacy, or a child of the deceased beneficiary can be minor or mentally incapacitated and a conservator may need to be appointed, or a child of the deceased beneficiary might be receiving federal or state means-tested benefits that possibly could be negatively affected by the inheritance.

It is advisable to consider if the antilapse statute applies to beneficiaries named in your estate plan and determine if a beneficiary is a grandparent or lineal descendant of your grandparents. If a named beneficiary is not such a relative, the legacy would lapse if that person predeceases you and it would then be distributed according to the residue clause in the Will. It is always a good idea to name alternative takers whether they are close relatives or not in case the beneficiary named in your documents unexpectedly predeceases you and you were unable to amend your estate plan. Consider who else you would want to alternately receive that legacy from your estate. Consider also if that alternate beneficiary is even able to directly receive the legacy because of being a minor or incapacitated or if that person’s receipt of certain means-tested public benefits could possibly be negatively affected. 

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.

Voluntary Probate

Pam OddyAttorney Pamela OddyMany relatives wonder if it is worth probating the estate of a relative who passed away owning no real estate and with only modest personal property. In fact, there is a short form of probate called a Voluntary that is specifically designed to simplify settling such an estate if assets in the estate are owned and titled in the deceased's name alone. It is significantly cheaper and faster than a standard probate.

The following requirements must be satisfied before a Voluntary Probate can be used:

  1. The Petition cannot be filed until 30 days from the date of death have expired.
  2. The total value of the assets excluding the car cannot exceed $25,000.00.
  3. It can be used only for personal property.
  4. It cannot be used for real estate, even if the value of the real estate is less than $25,000.00.

I find that the most common assets which are required to be probated after a person has died and which qualify for a Voluntary Probate are stock (often the result of the de­mutualization of the company, i.e. MetLife) and a car (providing the deceased did not leave a spouse).

When settling the estate of someone who has died, it is always worthwhile to ascertain whether or not the estate can qualify for a Voluntary Probate.

The views expressed in this column represent general information. To address your particular and specific needs consult your own attorney. If you need help with referral to an attorney, contact the Franklin County Bar Association at (413) 773-9839 or the Worcester County Bar Association at (978) 752-1311. Elder law resources may be found through the National Academy of Elder Law Attorneys, Massachusetts Chapter, at massnaela.com or 617-566-5640.

Community Legal Aid (CLA) provides legal services free to people age 60 and older for civil legal matters with an emphasis on access to health care coverage (MassHealth and Medicare) and public benefits as well as tenants’ rights. A request for legal assistance can be made by phone at 413-774-3747 or toll-free 1-855-252-5342 during their intake hours (Monday, Tuesday, Thursday, and Friday from 9:30 a.m. to 12:15 p.m. and Wednesday from 1:30 p.m. to 4:15 p.m.) or any time online by visiting www.communitylegal.org.