001hi I'm art Bergeron a presentation you're about to see is the one that I had pre-recorded for showing in Ashland in October this is all about planning for the children and the grandchildren so this is assuming that you're you're not leaving everything to your spouse because your spouse has died or because you don't have a spouse uh and so the question is where's the money going if you're just figuring I was just going to go to the kids the question is do the kids have any problems first of all um does one of does anybody have a potential divorce coming up do they have creditor problems so that you're inadvert you're not inadvertently leaving money to the creditors does anybody have a disability you don't want to inadvertently disqualify your children for from a government
002program because you'll leave it to them if there are grandchildren involved you really want to leave money to the grandchildren if you do and they're young who's going to manage that money for them if they're young all that whole cluster of issues which are traditional estate planning issues which we try to give answers to so if you got any questions on any of this please give me a call my direct line is 508 860 1470 I hope you enjoy the presentation thank you hi and uh welcome to uh episode 10 or seminar number 10 in the elder law 101 series that I've been doing since uh January my name is Art Bergeron I'm an elder attorney at Myrick O'Connell um the goal of these seminars has been to combine in one set of or series
003of 12 seminars kind of everything I know and everything I think that you need to know uh as a senior as you get older in terms of dealing with your own life and regarding your estate plan after you die so uh just to kind of refresh you for a second this is this is seminar number 10. right at the beginning we talked about dealing with your issue dealing with issues when you were under 60. we talked about a number of issues we talked about issues that were special to you in if you're in your 60s so if you are in your 60s now you should really watch that one uh things like dealing with um now that you've started you've got tax referred money that you now can take out without a penalty you get
004Social Security you get a bunch of issues dealing with your 70s when you're starting to think about you know maybe what thinking about whether you want need to change the place where you live you want to be thinking ahead about it whether whether you're ever going to need Mass health later on dealing um we talked specifically about taxes because it was April and on the fourth episode then we talked about life in your 80s we spent time talking about why you can always qualify for Mass Health probably one of the most common issues that I talk to folks about we talked about the last year of your life which no one wants to talk about which is probably one of the most important seminars that you can watch we talked about what happens after you
005die and what needs to happen the post-mortem to-do list we talked about trust Administration um last month and then for this episode we are talking about what you probably thought that you came to your lawyer to talk about in the first place which is kind of what is your basic estate plan specifically it's all about the kid and the grandkids later we're going to talk about Medicare in November because that's when it's Medicare you know enrollment time and then we're going to talk about plan giving or giving as well as tax planning in December so we're always talking about my friends Peter or Frank and Mary and their kids Peter Paul and Mary Jr um we're talking about them typically when we're talking about estate planning we're assuming that the basic estate plan is that
006if one of them dies all the assets go to the other for purposes of this presentation we're assuming that Frank's dead and therefore the planning that we need to do really is about what happens after Mary dies before or after Mary dies we're assuming that they have a house which is worth about four hundred thousand dollars that they've got a cottage someplace that's worth another four hundred thousand dollars that Mary has an IRA worth a hundred or worth 300 that she's got savings worth 200 their total assets are a million three obviously your situation is not going to be just like occurs um so you're going to to really kind of focus on your situation the underlying subtext here is you need to talk to a lawyer you need to talk to alert talk to
007them about your situation what is unique about it and how to handle your asset your own asset situation um first before we talk about the way the ways the issues that you might or the problems that you might have and the way you ways you might want to get around them I'm going to talk about the basic what happens if Mary who had the assets that I just went through died and had no will well um regarding her um her Ira she would have needed to name a death beneficiary or she would have been asked to name a death beneficiary well what if she didn't what if these assets she just died and left no will and all these assets were passing through her estate what would happen in that case uh is that the
008assets would get divided equally and so if Mary's basic estate plan is that when she dies she wants everything to be divided equally that's what's going to happen anyway whether she has a will or not now if there are children if there if any one of her children has pre-deceased her then under current law that that child's children would receive that pre-dices child's share interestingly by by the way there is this kind of bizarre part about the current law that if two of her children had pre-deceased her it's a Peter pre-deceased since her leaving three kids and Paul predeceases her leaving two kids so that there were a total of five grandchildren the way that the assets would get divided would be that Peters and Paul shares would be combined and then the assets would
009be divided by five it is not that Peter's share would be divided by three and Paul share would be divided by two so everybody would end up getting that's a bizarre little piece of the law uh if there is no will and therefore if you have if if your goal is to make sure that if any one of your children has pre-deceased shoot that child share goes to that child's children you want to have that you need to have handle that through a will um if any of the children were under 18 and there were no will then that child's share would end up getting held in an account that the Probate Court would order be created uh the that that person under 18 would have a guardian uh and that Guardian would have access
010to those funds and at the time that that child was age 18 the child would get all the funds another reason why in many cases you don't want to be a rely playing on dying without a will and using this system because in that situation you if you've got any kind of significant amount of assets you're going to end up with an 18 year old getting a lot of money at some point maybe not the best idea if there are no children then in Mary's assets would be divided among her siblings if this is as is not uncommon her siblings have died of those assets each of that each sibling's children would receive the share that would have gone to that sibling etc etc so the point is there is always a system and the
011assets are always going to get divided among typically among family members if you die without a will it is inconceivable to me that those assets would end up going to the state oftentimes people will say I need a will because otherwise the assets will go to the state no if there is money I've been doing this for 43 years and I can tell you if there's money there will always be a cousin there will always be somebody who will show up looking for that money so the question only is it when you die is that who you want to have get the money these cousins that you've never heard of as opposed to leaving the money someplace else so that's the kind of the basic system so in terms of what what Mary would be
012want to be dealing with if her if if all other things being equal she would simply want her assets to be divided equally among the three kids um is well what if one of those kids has problems by the way one of the other issues that comes up is of course if Mary does want the assets to be divided unequally among the three kids then for sure she needs a will or some mechanism to make sure that she is not going to end up dying and having these assets passed through intestate where there's no will and therefore getting divided equally among the kids but what if for example you've got that daughter-in-law that you never liked in the first place and that really isn't getting along very well with your son and you're just not
013sure you're just not sure if in the long run that marriage is going to last so the question is what can you do about that now the most common answer it is assumed uh is to have the share that would have gone to Peter in that case going to trust for Peter's benefit but there are a couple of caveats to that I just want you to be clear on them um first of all uh the the law in Massachusetts and this varies by state so so a piece of your decision regarding how to deal with this would relate to where your son lives in what state your son lives and I know this sounds like it's pretty granular but you you this could really change your estate planning if your son or your daughter is
014in in a in a depending on what state they're in in Massachusetts if your dog if your daughter-in-law divorced your son and the question was how the assets would be divided up in general um the the so-called marital estate the estate that's going to be getting divided up by the uh Probate Judge would consist simply of the assets that were owned by one or both of them and the assumption would be in general that other assets would not get um get considered however there is an assumption in Massachusetts that the division of assets needs to be Equitable not necessarily equal so if you died and left a lot of money um to Peter or even in trust for Peter um the court could consider whether as a result of that those funds that are in
015trust for him uh his basic situation is such that he's he's going to be otherwise well-off enough that he doesn't deserve to get 50 of the assets maybe he's on no they the judge would never say well he's not going to get any of the assets but the judge might say he's going to get 45 or 40 percent of the assets depending on how that trust is worded and depending especially on what his access is to those assets whether he has real whether those assets are really accessible to him whether it's in trust or not is an issue but the real question is accessibility so when you're thinking about those issues and you're worried that there might be a contest especially if there's quite a bit of money involved right then what you may want
016to think about is who should be the best who would be the best trustee for Peter's benefit would it really be a sibling right or would it better would it be better if it were a professional trustee so that the court were saying well you know this it it isn't like this is all a sham and your brother's got all the money and he's just going to give it to you after the divorce right if so the question is should there be a professional trustee should there be some limits on the amount of the distribution if the courts issue is are the distribution is the division of assets Equitable then that's going to be affected by whether Peter or the trustee has the discretion to give Peter a million dollars out of the million dollars
017that is being held for him right in trust versus a hundred thousand dollars or versus so much per year so you could put those kinds of limitations thereby reducing the chance that a judge is going to say using that doctrine of Equitable not equal that the existence of those funds even in trust are going to affect how the assets get divided finally another kind of easier solution is simply give Peter's a share to the grandchildren or specified that if Peter if at the time of your death Peter is Peter is going through a divorce that the Assets in that case would go directly to the grandchildren or in trust for the benefit of the grandchildren now in that situation you probably don't want to name Peter as the trustee of that trust you probably want
018to name one of your other children the the aunt or the Uncle Paul or Mary Jr as the trustee of that trust so the point is if that issue is of concern to you then you really need to spend some time figuring out how to how to best insulate the money that you are going to really want to be leaving to Peter and and probably to the grandchildren in the event that that situation occurs how about disability let's say that Paul has a disability of some kind uh and and her his mother is trying to make sure that the assets that she is get leaving him as a result of her death do not uh inadvertently cause them to be disqualified for some government benefits and the disqualification may end up costing him more than
019the assets that Mary was giving him would have benefited benefited him so the the question to ask yourself in that case and it might really involve having a conversation with your child is what what is his situation what is the nature of his disability and what kind of government programs are is he on for example if he's on SSDI Social Security disability income because he showed to the Social Security Administration uh that first of all he had worked enough quarters to be eligible for SSDI and secondly that he's totally and permanently disabled so that he cannot get substantial gainful employment for the rest of his life if that's his situation then his his social security check the SSDI check would not be affected at all by other income that he had or other assets that
020he had so you could leave him a million dollars and he would still get the exact same Social Security disability check you could leave a trust fund for him that was paying him ten thousand dollars a month it would not affect his Social Security disability check the only thing that would affect his SSDI monthly payment would be if he were working himself in deriving so-called earned income then that earned income would be could very well affect whether his SSDI checks continued if on the other hand uh PR Paul is on Mass health or you're concerned that Paul might end up needing Mass health in the future well that's a program that is asset sensitive that he would not be eligible for uh if he were if he had a substantial amount of assets and that
021if he is younger he would not be eligible for if he was if his income was higher than certain income criteria so in that situation you may very well want to make sure that assets that would have gone to Paul are going to go and Trust for his benefit you could you probably would just want to name Peter or or or Mary Jr you could name a relative as a trustee um if if he is getting if he is on SSI and people constantly confuse SSI supplemental security income with with Social Security disability income two completely different programs meant to do two different things and and therefore having two different sets of regulations SSDI Social Security disability income is as I mentioned meant to take care of somebody who was gainfully employed worked enough quarters
022to to as to be otherwise eligible just like you need to have worked enough quotas to be eligible for Social Security when he retires but then demonstrates that because of accident or sickness he is totally and permanently disabled SSI supplemental security income is available to anyone who can demonstrate that they are poor uh and poor there is a very low bar to you know what the income is that you can have in order to demonstrate that you are really poor because the point of the SSI check the supplemental security income check is to supplement your income up to that amount up to that poverty amount but that poverty amount for a single person in Massachusetts going to be about 900 a month so it's a very very low number so so if you're if your
023child is on SSI then any other income that he receives is is basically counted against him because the point of the SSI check is to take the amount of income that he has and supplement his income up to this magic number of say nine hundred dollars a month so if he was actually if you actually left him trust money in which he was guaranteed a check of so much per month that money is going to get subtracted dollar for dollar from the from the amount that he's going to get on SSI so you want to be really careful about that typically in that case you would create a so-called supplemental Needs Trust that would specify that the whole point of the trust is just to supplement his needs SSI also has some specific criteria that
024you cannot have that trust paying for his food clothing or shelter um because the the assumption is that if he's got that that was the point of the SSI check in the first place so you want to be really careful if your son is on SSI or your son or your daughter or if you think that later on they may need to qualify for MassHealth and finally um as I mentioned um you would you need to deal with this housing issue um you you also probably because this could last for a long time while Paul is alive uh you probably want to name a successor trustee uh in the event that the initial trustee that you name no longer can serve because this could go for a long time you also want to deal with
025final distributions in this case where's the rest of the money going to go uh after Paul dies finally let's say that Mary does not have a disability and doesn't have a spouse who's a problem but has some kind of problem whether it is just that she just isn't great with money and she's got a ton of creditors maybe one of those creditors is the IRS right the kind of the worst credit to have um maybe she's got a job in which there is significant potential liability I always think about nurses the liability derived from a job is typically derived from a job in which you can be accused of hurting somebody and therefore causing them pain and suffering because there is kind of No Limit to the amount of money that can be awarded to
026somebody an aggrieved person for pain and suffering nurses are just you know Prime candidates for that kind of suit nurses doctors anybody that is in a profession where they're actually touching people right so it may be that that's your concern or it may be just a concern that you know she's you're concerned about kind of protecting Mary from herself maybe she's got a drug problem maybe she's got any number of other maybe maybe you're not crazy about the guys that she's hanging around with if for any number of reasons you may want to put some controls on those funds in that case once again your question is going to be you know is the sibling appropriate it has been my experience and once again I've done a lot of this kind kind of work it
027has been my experience that in those cases often another sibling is not the best person because typically if Mary's got some issues Mary has also got some issues with those other siblings and there is there there in many cases there is bad blood so your ideal trustee is often a third party now in these situations it's often hard to find a prison who's going to be the trustee because if Mary's got issues they don't want to deal with Mary so that may be a real problem I mean there are some cases where people will actually name a lawyer to be the trustee lawyers are in an incredibly expensive trustees so you really want to Only Name the lawyer as the last resort right but if nobody else is there to do it or if if
028Mary is a litigious kind of person so you think she may be threatening suit all the time in that case the lawyer may be the ideal trustee once again in that situation you want to deal with you know where is the money ultimately going to go what is the final distribution after Mary died because there could very well be money left there after she dies then there are the grandchildren and there's also often a lot of discussion about well you know I really want to leave some money to the grandchildren I want to pay for their college education I want to do a lot of stuff for them well remember first of all if you're if your goal is to pay for their college education remember that by leaving them a big chunk of money
029even if it is in trust for their benefit and even if that trust specifies that that money can't be paid to them until they are above a particular age like college age above 22. even in those cases um that the existence of those funds is going to get need to get reported on the so-called FAFSA on the form that that the uh that the federal government would use or or requires it in many public institutions and those funds are typically also reportable on any other private college forms and it has been my experience although this obviously varies from school to school that typically when colleges are evaluating the availability of scholarship or loan funds to a student if they determine that the student has funds or has access to funds or will have eventual access
030to funds they will often subtract those funds dollar from dollar dollar for dollar from the amount that they're willing to give the student in student aid so as they tell people you know you may find that you thought you were funding you were giving money to your grandchild but you're really giving it to Harvard because they ended up shrinking the uh the aid package they would have given because of all of that so it may be that you want to do that you can also certainly put money into so-called 529 plans those are the plans um and there are there are other there are other kinds of plans that are like 529 plans that are kind of specific to certain industries basically the concept of a 529 plan is that you're putting money into an
031account uh you are the the the the the income that is being earned on that money is not getting taxed while the money is in there and as long as the money ultimately ends up getting used to pay for that child's education uh the money ends up never getting taxed uh however the the person who has that 529 account or it or a like account can always get the money back the issue is that of course if they take the money back at the time they get the money back the income that has accrued from the interest or dividends or whatever at that point there's going to be a tax on that income the other thing about these the 529 plans is is that people should be aware for so many among seniors for Mass
032Health Asset Protection purposes even if the money is in a 529 plan for your grandchildren because you have the ability to get it back uh if you later need to qualify for Mass Health and there is money in there for Mass Health purposes that's money is still yours you have to cash it in pay the tax and spend it down on nursing home care before you can qualify for Mass Health um you know one of the one of the questions regarding any of those issues is if your if one of your children has died and you've got money that is going to the grandchildren who's the trustee managing the money for the benefit of the grandchildren we would typically recommend that you sh that shouldn't be a spouse right because we've had situations now once
033again you you know your family situation we don't right lawyers don't but we certainly had situations where someone dies a younger person and the spouse remarries and suddenly finds himself or herself having raising the original children your grandchildren and raising these other children and then having trust money available for some and not for others and that's just not a good situation to put that spouse in so in so typically we advise that if if your concerned that if a spouse if a child dies where does the money go typically we recommend that another one of your children be named as the trustee for the benefit of the um of the grandchildren finally there are all these um considerations regarding how to deal with this what's the best vehicle for doing all of this stuff well
034certainly there's a will and then if you've got any of these issues regarding a particular child that will couldn't contain any of the trust Provisions that we talked about there is joint ownership of assets or there's there's there is a provision that you could put regarding many of Mary's bank accounts and things where when she dies the children simply receive the money or there's irrevocable and amendable trust each of these has pluses and minuses certainly the easiest is to Simply put assets and Joint names with your kids or to name your kids as the death beneficiaries uh if the assets are in joint names with Peter for example then at the moment of Mary's Death Peter gets all the assets nothing goes through probate it's very easy bad news is that if Peter ends up
035to be not as nice a guy as Mary had hoped uh Peter can just grab that money at any time because he's the joint owner it may be not the right answer the second solution is often to have a will that's a that was is traditionally a common solution through which you can divide up all the assets do all the things that we just talked about the only problem with with owning assets at the time you die is that if you have they're being distributed through a will just like if they're being distributed through intestacy before assets can be distributed creditors have to get paid in Massachusetts creditors have one year from day of death to file a claim against the probate estate which means that assets don't get distributed for at least a year
036then of course there were the legal fees of going through the probate process and it's an easier Forum to have arguments the final Choice therefore and the choice that many seniors will will adopt if this is their only issue is in their estate planning is making sure that things are distributed correctly after they die and they're not worried about nursing homes and other issues would be to have a revocable and amendable Trust revocable means whatever Mary puts into the trust she can take out amendable means she can change it anytime while she's alive she'd be the trustee but she would name one of her kids as the successor trustee and then the child immediately could following Mary's death uh distribute all of the assets I was going to talk a little bit about Cottages but
037I'm not because I'm um looking at my clock and wanted to make sure that we covered all of the issues that are the basic issues that Mary needs to know about regarding these the uh Distributing assets to her kids and to our grandkids I hope this was hope helpful for you as I mentioned at the beginning your situation is not necessarily Mary's it may be similar but it's never going to be exactly right exactly the same we really need to talk to a lawyer about making sure you get all of this right thank you very much for watching and I look forward to seeing you uh in the next seminar episode next month thank you