Planning for Life

7 Reasons You Should Consider A QTIP Trust

Posted by Anthony Bushu on April 26, 2017

By Harry S. Margolis

QTIP-trust-estate-planning-attorney-Wellesley-MASo, what's a QTIP trust? "QTIP" stands for qualified terminable interest property. Total legal gobbledygook, right? So forget the words. What it means is a trust that you leave for your spouse that gives him the right to all of the income and limits his right to the principal. Those limits can be total, meaning no right to principal, or minor, meaning simply limited by the HEMS standard (for health, education, maintenance and financial security) or fully available but controlled by a trustee other than your spouse.  

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Topics: trusts, asset protection, Estate Planning, estate taxes

In Pfannenstiehl Case, MA SJC Affirms Use of Asset Protection Trusts

Posted by Harry S. Margolis on August 9, 2016

By Harry S. Margolis

Divorce-asset-protection-irrevocable-trust-Wellesley-MA

On August 8, 2016, in the case of Pfannenstiehl v. Pfannenstiehl, the Massachusetts Supreme Judicial Court unanimously overturned a lower court decision that had ordered that assets in an irrevocable discretionary trust created by the husband's father be split in a divorce. The SJC in this decision upholds the use of trusts to shelter assets for future generations.

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Topics: trusts, asset protection

Does Pfannenstiehl Case Undermine Asset Protection in Massachusetts?

Posted by Harry S. Margolis on September 22, 2015

By Harry S. Margolis

An interesting court decision with an interesting name may undermine the efforts of parents to provide for their children and grandchildren while protecting their inheritance from lawsuits and in the event of divorce. In Pfannenstiehl v. Pfannenstiehl (Mass. App. Ct., Nos. 13-P-906, 13-P-686 & 13-P-1385, August 27, 2015), the Massachusetts Appeals Court ruled that a portion of a trust created by the parents of Curt Pfannenstiehl for his benefit and that of his siblings would be considered as a marital asset in his divorce from Diane Pfannenstiehl. This ruling, which undermines centuries of established trust law, was based in part on the equities of the situation and in part on a misunderstanding of wording commonly used in trusts.

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Topics: trusts, asset protection, divorce

How to Protect an Inherited IRA

Posted by Harry S. Margolis on January 27, 2015

By Harry S. Margolis

Inherited-IRA-Family-Protection-Trust-Wellesley-MA

If you leave a 401(k) plan or individual retirement account (IRA) to your spouse, he will be able to roll it in with their own IRA. It will be subject to the same rules regarding minimum required distributions (MRDs) as apply to the retirement plans already owned. He'll have to begin taking withdrawals from them the year after he turns 70 1/2. In addition, he will receive the same creditor protection that his other retirement accounts receive—in bankruptcy proceedings, 401(k) and IRA funds are protected.

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Topics: asset protection, Retirement Planning

How to Tailor Your Asset Protection Trust

Posted by Harry S. Margolis on December 30, 2014

By Harry S, Margolis

Tailor-Asset-Protection-Trust-Trustee-Family-Wellesley-MA

Traditional trust law permits parents to leave funds for their children and grandchildren in a way that protects the inherited assets from creditors, double estate taxation, in the event of divorce, and from being lost to in-laws if a child dies. Depending on which of these goals the the grantor of the trust seeks to achieve, the trust must have one or more features that restrict access and control by the beneficiaries.

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Topics: asset protection

Is an Inherited IRA Protected from Creditors? No!

Posted by Harry S. Margolis on July 15, 2014

Inherited-IRA-protection-retirement-Wellesley-MA

In general, under the 2005 Bankruptcy Code, IRAs and other retirement accounts, such as 401(k)s and SEP plans, are protected in the event of bankruptcy by the owner—which is one more reason to fund your retirement plan with as much as possible. But what about an inherited IRA? The U.S. Supreme Court decided in the 2014 case, Clark v. Rameker, that these types of retirement accounts do not enjoy any bankruptcy protection.

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Topics: asset protection, Retirement Planning, Probate Estate Administration

Will MassHealth Take My House? Asset protection in Massachusetts

Posted by Harry S. Margolis on June 24, 2014

By Harry S. Margolis

Masshealth-asset-protection-Massachusetts-Wellesley-MA

I'm often asked whether MassHealth "will take my house" or other assets. A recent posting on ElderLawAnswers.com, where I answers questions from consumers, reads in part:

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Topics: special needs planning, MassHealth, asset protection

9 (Potential) Problems with Your Trust - Massachusetts

Posted by Harry S. Margolis on December 3, 2013

By Harry S. Margolis

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Topics: trusts, asset protection, Estate Planning, Retirement Planning

Life Estate Owners: Beware Solvency of Remaindermen - Massachusetts

Posted by Harry S. Margolis on April 2, 2013

Life-Estate-Remaindermen-Wellesley-Estate-Planning-Attorney

By Harry S. Margolis


In Gordon v. Pappalardo (BAP No. MW 12-60, March 13, 2013), the U.S. Bankruptcy Panel for the First Circuit confirmed a Bankruptcy Court decision that holders of a remainder interest in real estate in Massachusetts do not qualify for homestead protection.

Life Estates

A life estate is a common form of real estate ownership often used for estate and long-term care planning purposes. Typically, parents will execute a deed reserving a life estate and granting a remainder interest to their children. As a result, both the parents and the children own an interest in the real estate, but the parents have the full right of possession during their lives. This means that only the parents have the legal right to live in the property; they would receive the income if the property were rented out; and they are responsible for its upkeep and maintenance. At the parents' death, the property passes automatically to their children, who are called the "remaindermen."

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Topics: long-term care planning, asset protection, Estate Planning, life estate

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