Planning for Life

Harry S. Margolis

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What You Need to Know about Special Needs Trusts and Taxes

Posted by Harry S. Margolis on January 22, 2020

By Harry S. Margolis

special-needs-trust-Wellesley-tax

Trusts created for individuals with special needs generally fall into two broad categories: those created with the beneficiary's own funds, often from the proceeds of a personal injury settlement, and those funded by third parties, often by parents and grandparents. The tax treatment of the two trusts is somewhat different.

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Topics: special needs planning, income taxes, Special Needs Trust

3 Implications of the SECURE Act

Posted by Harry S. Margolis on January 14, 2020

By Harry S. Margolis

SECURE ACT - 2020 - Margolis-and-Bloom

We reported on the SECURE Act when it was enacted at the end of last year. (You can read about the rules it changed here.) Since then, we and other attorneys have been parsing it and learning a lot more about how its changes work and how they may affect clients. Here's some of our new learning:

1.  Estates in Progress May Want to Disclaim

Except for eligible beneficiaries (spouses, minor children, and disabled or chronically ill individuals), those inheriting IRAs from decedents dying this year and in the future will have to withdraw and pay taxes on the inherited accounts within 10 years from the year of the original owners death. Those who inherited IRAs from people dying before this year can continue to "stretch" out the distributions through their own lifetimes.

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Topics: Retirement Planning, Special Needs Trust, Retirement Benefits, SECURE Act

You Can't Amend Your Trust by Post-It Note

Posted by Harry S. Margolis on January 7, 2020

By Harry S. Margolis

trust-amendements-margolis-and-bloom

A California case stands for the rule that trust amendments must be in writing and signed. In the case of Pena v. Dey James Robert Anderson was diagnosed with abdominal cancer in 2010 and brain cancer in 2011. His friend, Greg Dey, moved in with him in November 2011 and cared for Anderson until his death in May 2014.

In February 2014, Anderson sent his attorney a marked up copy of his revocable trust crossing out certain beneficiaries and adding Dey and two other beneficiaries each to receive "7% of 49%." The trust was to be divided into two shares, with 49% percent going to various individuals and 51% to three charities.

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Topics: will, revocable trust

What the Secure Act is All About

Posted by Harry S. Margolis on December 24, 2019

By Harry S. Margolis

Retirement-Margolis-and-Bloom-Secure-Act

As part of the spending bill that recently passed Congress, effective January 1, 2020, new retirement plan rules will apply. They included in the Secure Act, which is an acronym standing for Setting Every Community Up for Retirement Enhancement. A big part of the bill encourages small employers to band together to offer retirement plans, which is the reason for the title. But here's what may affect you and your family.

  1. Later Required Beginning Age. For those who have not already reached age 70 1/2 by the end of 2019 (meaning they were born on or before June 30, 1949), they can delay taking their required minimum distributions until the April 1st of the year they reach 72, rather than 70 1/2. If you were born after June 30, 1949, you can still choose to withdraw without penalty, other than paying taxes on the amount withdrawn, any time after age 59 1/2, you just don't have to do so quite as early.
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Topics: Retirement Planning, Retirement Benefits

Assisted Living Facilities Subject to Landlord-Tenant Law, SJC Rules

Posted by Harry S. Margolis on December 17, 2019

By Harry S. Margolis

Assisted-Living-Elder-Law-Margolis-and-Bloom

As we've reported in a previous blog posts (here and here), a case challenging the practice of assisted living facilities charging a "community fee" on entering the facility has been wending it's way through the Massachusetts court system over the last several years. Now, the Supreme Judicial Court has ruled in James M. Ryan v. Mary Ann Morse Healthcare Corp. (SJC-12708, Dec. 5, 2019), that assisted living facilities are subject to landlord-tenant law including its security deposit regulations. The assisted living facility industry had been arguing that the landlord-tenant laws were preempted by assisted living statutes and regulations.

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Topics: assisted living regulations, assisted living

Assisted Living and Wishful Thinking

Posted by Harry S. Margolis on December 10, 2019

By Harry S. Margolis

assisted-living-elder-care-planning-margolis-and-bloom

An op-ed article in The New York Times highlights how the assisted living industry in part profit from a mirage about the realities of aging. No one want to go to a nursing home, which are seen a depressing dumping grounds for ailing or demented seniors who have no other choice. Many seniors or their families choose assisted living as a much preferred option.

For those seniors who are healthy, assisted living can be wonderful. They provide meals, community, activities and some assistance with the activities of daily living, often a much better alternative to an isolated existence in a single-family house.

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Topics: assisted living, CCRCs

Inequality of Aging Baby Boomers to Create Huge Challenge for the U.S.

Posted by Harry S. Margolis on December 3, 2019

By Harry S. Margolis

baby-boomers-aging-masshealth-margolis-and-bloom

The future of most members of the Baby Boomer generation portends poorly. They have not escaped the income and wealth inequality experienced by the rest of the U.S. population and, as a result, most will have insufficient resources to fund their later years, especially if they fall ill.

According to a study recently released by Harvard's Joint Center for Housing Studies, the annual income the top 10% of earners over 65 has grown 55% in constant dollars over the last 30 years. That of the bottom 10% has grown 11%. The income of the median senior in the United States has grown 40% over the same period of time $31,000 to $41,000 a year (in constant 2017 dollars)

Income Disparity Among Older Households - Harvard JCHS - Older Adults Report 2019

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Topics: baby boomers

The Pernicious Unfairness of MassHealth Estate Recovery

Posted by Harry S. Margolis on November 26, 2019

By Harry S. Margolis

MassHealth-Estate-Recovery-Margolis-and-Bloom

Medicaid (MassHealth in Massachusetts) is health insurance for people who can't afford to buy private insurance. But its coverage is much broader than that of private health insurance including coverage of long-term care costs, paying for nursing home care and in some instances for assisted living and home health care. To qualify, you have to satisfy very complicated financial eligibility rules, rules that often can be traps for the unwary.

One of the most significant traps is Medicaid's right to recover its expenses from your estate after you die. Since about the only asset you're allowed to own and still get Medicaid coverage is your home, this right of estate recovery is the state's claim against your home. In other words, if you own a home, Medicaid is really a loan. It will pay for your care, but your house will have to be sold when you die to repay the state for the care it provided.

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Topics: estate recovery

The Ultimate Juggling Act: Working, Raising Children and Caring for Aging Parents

Posted by Harry S. Margolis on November 19, 2019

By Harry S. Margolis

Working-Daughter-Aging-Elder-Care-Margolis-and-BloomManaging raising children while holding down a full-time job is a challenge for all parents. Add in caring for aging parents and it can feel more like a vise than the proverbial sandwich. Dedham-based marketing executive Liz O'Donnell has written a book, Working Daughter: A Guide to Caring for Your Aging Parents While Making a Living, and started a website, www.workingdaughter.com, both aimed at helping daughters of elderly parents better manage the pressures coming at them from all directions. Both are based on O'Donnell's own experience trying to care for her parents, raise her children and meet the requirements of a demanding job. They are full of good advice for other daughters (and sons) facing the same challenges.

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Topics: caregiving, Caregivers

How Does MassHealth Calculate Life Estates?

Posted by Harry S. Margolis on November 12, 2019

By Harry S. Margolis

life-estates-margolis-and-bloom-masshealth-remaindermen

Life estates have long been a prime long-term care planning device for protecting the home from MassHealth estate recovery because they're quite simple to create. MassHealth recently changed its rules in terms of how it measures life estates when they are created or when property held in a life estate is sold.

What is a Life Estate?

A life estate is a form of joint ownership of real estate where ownership interests are divided by time. The so-called "life tenant" has the right to occupy the property during his or her life and to collect any rental income earned from the property. The life tenant also has the obligation of maintaining the property.

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Topics: MassHealth planning, MassHealth, life estate

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