PBM
Prevent Estate Planning Blunders
Feb 16, 2023

The two most important blunders in estate planning are [1] not making an estate plan at all and [2] not using an experienced, knowledgeable estate planning lawyer to accomplish your goals. 


The downside of not planning at all is ignoring the reality that protecting your family for unforeseen circumstances is unwise, but let’s look at why estate planning should also not be a do-it-yourself project. If you compare estate planning to other services requiring specialized knowledge, training, and skill — e.g. electrical wiring, plumbing, brain surgery — you will realize that they all demand experience and expertise that most lay people do not possess. Using an experienced estate planning attorney is the first step to take to avoid making costly blunders. 


Neglecting to Protect Assets

The Law Offices of Patricia Bloom-McDonald possesses the knowledge to avoid the following issues:

  • Excessive Taxation
  • Scams
  • Long-term medical costs


Attorney Bloom-McDonald is experienced at creating irrevocable trusts to protect resources for not only a special needs child but for anyone requiring long-term care utilizing government benefits. She is also ready to create Revocable Trusts and or business structures, such as limited liability companies, that may offer protection of your personal assets if your business is sued, and other trusts that have the advantage of removing your assets from your ownership.


Neglecting to Update Your Estate Plan When Life Changes Occur

Major life events, like the following, make it crucial that you make changes to your estate plan in terms of naming new beneficiaries, not only in your Last Will and Testament, but on your insurance policies, bank accounts, and retirement accounts, or perhaps naming a new Personal Representative:

  • Birth
  • Adoption
  • Marriage
  • Divorce 
  • Remarriage
  • Death
  • Change in family dynamics
  • Relocation to another state
  • Major illness, injury or incapacity


Attorney Patricia Bloom-McDonald pledges to assist you whenever your estate plan needs to be amended due to a life-changing event taking place. 


Entrusting Assets to a Beneficiary Who Is Unable to Manage Money

It would be a serious mistake to gift a large inheritance to a minor child, grandchild, or someone you love who has an ongoing issue with money and  who cannot handle funds, without setting up a protective trust naming a responsible trustee. 


Attorney Patricia Bloom-McDonald can also guide you through the process of creating a spendthrift trust to provide a loved one who is addicted to alcohol, drugs, or gambling with resources to protect those inherited assets from being misspent.


Neglecting to Prepare for possible Incapacity or Long-Term Care

It is hard to think of our own mortality, but it may be even harder to consider the possibility of becoming incapacitated physically or mentally. Unfortunately, statistics show that most Americans over the age of 65 will require long-term care at some point. 

Because of the exorbitant cost of long-term care, very few people will be able to afford years of nursing home care or private in-home nursing care without MassHealth/Medicaid assistance. 


Attorney Patricia Bloom-McDonald is particularly well-prepared to help you protect your assets so that you can retain eligibility for government assistance should it become necessary. 


Contact Attorney Patricia Bloom-McDonald Today!

The best way to avoid estate planning mistakes in Southeastern Massachusetts is to work with Attorney Patricia Bloom-McDonald. She has been in this line of work for over thirty years and is well-aware of the consequences of improper wording, oversights, and failures to make necessary changes. 


Contact Attorney Patricia Bloom-McDonald vows to make certain your estate plan does what it is supposed to do — protect your assets and your loved ones from whatever unforeseen challenges may lie ahead.

Using a Credit Card When You Have a Special Needs Trust

25 May, 2023
A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid/MassHealth and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education,and housing. Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid/MassHealth recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction. In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient. Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid/MassHealth and SSI. Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations. The Benefits of Using Credit Cards When You Have a Special Needs Trust If you have a special needs trust, using a credit card has many benefits, including: Independence : Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you. Access to the Typical Advantages of a Credit Card : Using it responsibly can help you establish or build credit history, which may be important for your future financial needs. Record-Keeping : Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust. Benefits Eligibility : While adhering to Medicaid/MassHealth and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits. Considerations When Using a Credit Card for Your Special Needs Trust While you can use a credit card to access funds from your special needs trust for certain transactions , restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility , they can flag it for review. You cannot use your credit card to pay for food and shelter, which SSI would cover. When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust. While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income. Best Practices When using a credit card for a special needs trust fund, remember several best practices. Choose a card with low fees and interest rates. Set a clear budget and monitor transactions regularly. Keep thorough records and receipts of expenses. Consult with your special needs planning attorney. A special needs planning attorney can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid/MassHealth and SSI eligibility. 

How an ILIT can help offset estate taxes

12 May, 2023
With the Federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax which is currently $1 million in the Commonwealth of Massachusetts. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely that some change to the estate tax is coming. Even if Congress does not take any action, the current rate will sunset in 2026 and essentially be cut in half, to about $6 million per individual. In the Commonwealth of Massachusetts, the current estate tax exemption is $1 million for individuals and is taxed at dollar $1.00. A proposal to raise it to $3 Million and the tax to start at $3 Million (not at $1.00) has been submitted in the legislature but has not yet been voted on or enacted. One way to make up for any estate tax your estate may have to pay is by setting up an irrevocable life insurance trust [ILIT]and funding it with a policy that has a death benefit that would pay your heirs some or all of the amount your estate will be taxed. If you purchased such a life insurance policy directly, it could end up being taxed as part of your estate. But if a trust owned the policy, it could pass outside your estate. While a life insurance trust can be highly beneficial, it is also complicated to set up and maintain properly. The following are some of the requirements: Trustee . If you are setting up the trust, you cannot also serve as a trustee. If you are the trustee, you have control of the trust, which could lead to the trust being included in your estate. You will need to name another trusted person or financial institution to act as trustee. Policy ownership . The trust must own the life insurance policy. If you transfer an existing policy to the trust and die within three years, the policy will still be considered a part of your estate. To avoid this risk, the trust can purchase a policy directly rather than receive an existing policy. Premiums . You need to transfer funds to the trust to pay the policy premiums, which creates an issue with gift taxes. A transfer to a trust is usually not subject to the $15,000 yearly gift tax exclusion. For a gift to qualify for the exclusion, the recipient must have a "present interest" in the money. Because a promise to give someone money later does not count as a present interest, most gifts to trusts aren't excluded from the gift tax. To avoid this, you can use something called a “Crummey” power which gives beneficiaries the right to withdraw the funds transferred to the trust for up to 30 days. As part of the process, the trustee needs to send them a letter, known as a Crummey letter, letting them know about the trust funding and their right to withdraw the funds. After the 30 days have passed, the trustee can use the funds to pay the annual insurance premium. You run the risk of the beneficiaries withdrawing the funds, but if they know that by allowing the money to stay in the trust they will receive more money later, it shouldn’t be a problem. Beneficiaries . The beneficiary of the life insurance policy is usually the trust. Once the funds are deposited in the trust, the trustee can distribute the assets to the beneficiaries in the way specified by the trust. For example, if your beneficiaries are minors, you can wait to have the trustee distribute the assets. Keeping the assets in the trust will also protect them from your beneficiaries’ creditors. The downside of an irrevocable life insurance trust is that you do not have the ability to change it once it is set up, although the policy would effectively be canceled if you stopped paying the premiums. If you are considering this type of trust, discuss it with your attorney.
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