Why Create a Trust?

Due to changes that limited federal estate tax to only high valued estates, many people believe there is no reason to set up a trust to guard their assets. However, a recent article outlines five reasons that trusts might be the right choice even for smaller estates:

    1. Holding assets in trust may allow estates valued at over 1 million dollars to avoid significant Massachusetts tax liability.

    2. A trust will avoid the often long and costly, and always public, probate process, where the will, the accounting of the estate disbursements and revenue, and the probate asset inventory will all be available to the public.

    3. Allowing assets to be distributed through a trust will give parents the ability to moderate how much access a young child has to a house, life insurance, retirement assets, or cash, so that the children are not put in a position to misuse estate assets. It may also help where there is concern over poor money management skills, business liability, or creditor problems.

    smiley mom and daughter on grass

    (Photo credit: MyTudut)

    4. A child’s eligibility for public benefits can be affected if the child receives an inheritance. Whereas, holding assets in trust for the benefit of the child will help ensure that the child remains eligible and that resources are there to provide care over the long term.

    5. A revocable trust also gives a person the ability to determine how he or she will be cared for and how decision will be made in the case of incapacitation.

An Estate Planning Success Story

In an article, Pat Mertz Esswein explains how her mother took all the right steps in laying out her estate plan, so that when she passed nothing was left undone and no one was left to deal with unanswered questions.

Mother & Daughter

(Photo credit: footloosiety)

Pat’s mom kept her will, power of attorney, and advanced directives accurate and up-to-date, and stored them together in a large white envelope. After a health scare in 2008, during which the family could not find the envelope, Pat labeled it “THIS IS IT” so that there would be no confusion.

In addition, after 2008, Pat’s mom registered her power of attorney at the county courthouse, and added her as a co-signatory on her safe-deposit box, so that Pat could start planning and organizing her mom’s financial affairs while she could still communicate her wishes. The experience was helpful later on when Pat was tasked with being executor of her mom’s estate.

Pat’s mom was clear about what kind of funeral she wanted, including specifics such as the dress she wanted to be buried in and who should serve as the pallbearers. Pat’s mom made it simple to contact friends and relatives with up-to-date holiday and email lists. Also, she left a list of her “team,” including her lawyer, accountant, stockbroker, priest, and insurance agent. In her will, Pat’s mom even left her daughters some advice and instruction saying, “Please do not have any hard feelings over things. Your relationship as sisters is far more important.”

Learn From These 6 Estate Planning Mistakes of NFL Players

In honor of the Big Game, a recent article explains six of the estate planning mistakes that NFL players commonly make. While not everyone will earn as much as an NFL star, the average American can still benefit from avoiding these mistakes in their own lives.

NFL Football player Troy Smith drinking Gatora...

(Photo credit: Wikipedia)

1. Living in the present, instead of planning for the future: NFL players earn most of their lifetime income in their 20s and 30s, and then retire early. As a result, it is especially important for them to plan for retirement early.

2. Choosing the wrong professional adviser: NFL players sometimes make the mistake of choosing a family member to help with financial planning instead of an estate planning professional. This can be a mistake if the family member is not experience in managing large quantities of assets.

3. Spending beyond their means: It is important to spend based on the cash you have available, not the salary total that appears in a contract.

4. Not maintaining liquid funds: Maintaining liquid funds to cover living expenses in case of an emergency is especially important for NFL players, who could experience a career ending injury at any moment.

5. Leaving assets exposed: Assets can be protected from creditors through trusts, incorporating limited liability entities, and under any state laws that protects specific assets, such as a person’s home.

6. Failing to see the bigger picture: Because NFL players retire earlier than most Americans, it is especially important for them to consider how they will live during retirement. Plans for a second career or to starting a business should be reflected in the estate plan.

Jim Henson Says Goodbye to His Loved Ones

Before his death, Jim Henson, the creative genius behind the much-loved Muppets, penned two letters for his loved ones to open on his death, one for his children and one for his friends and family. In 1990, Mr. Henson died at age 53 leaving family, friends, and several generations of fans and admirers to morn his passing.

Jim Henson

Cover of Jim Henson

Despite his early passing, Mr. Henson’s parting words were hopeful and uplifting. He wished his children a “fun, and joyous, and fulfilling” life and promised that if he could not watch over them, he would at least be waiting to meet them on the other side. He continued by reminding his children that he “has always loved each of [them] with an eternal, bottomless love” and asked them to “watch out for each other and love and forgive everybody.” He finished with a simple reminder and request: “It’s a good life, enjoy it.”

To his friends and family, his message was similar in tone. Mr. Henson explained that he was not afraid of death, but, instead, looked forward to being reunited with old friends. He conveyed his wish for a “nice, friendly little service of some kind” with a song or two from some of his friends that sing and few happy words from some of his close friends about what they enjoyed doing together. He also asked that a Dixieland band play and end the service with “a rousing version of ‘When the Saints Go Marching In.’”

Where do tweets go when you die?

When you pass away, you might leave behind online files at a number of different online sites. A recent article provides some advice on how to include these online assets in your comprehensive estate plan.

Facebook logo Español: Logotipo de Facebook Fr...

(Photo credit: Wikipedia)

Many companies with online accounts have set policy on what to do when their users die. Facebook will delete your profile at your loved ones’ request, or allow them to maintain the profile as a memorial. Yahoo and Instagram will delete your profile if your loved ones provide proof of death. However, they will not provide your loved ones with your password. Twitter will provide your loved ones with a copy of all your tweets. Google allows users to choose up to 10 people who can access designated files after you pass away.

It might not be practical to keep yourself informed of all the policies of the all online companies with which you have an account. Instead, consider maintaining a list of usernames and passwords for your online accounts. You can provide the list to a designated person and include instructions for how you want your accounts handled after you pass away.  If you are uncomfortable giving away your passwords while you are still alive, you can sign up for a service like PasswordBox, which allows users to store all of their usernames and passwords online. When you pass away, PasswordBox will grant a person of your choosing access to your information.

If you would like assistance with drafting an online estate plan or any other aspect of estate planning, feel free to contact me.

Vulnerable Aging Populations are affected by Rising Rates of Financial Exploitation

Financial exploitation is a serious and ongoing issue facing seniors nationwide, with losses estimated at around $2.9 billion nationally, and Massachusetts’ aging population is not exempt. According to a recent article, the Massachusetts Protective Services authorities were contacted around 21,000 times last year on suspicions of elder abuse, with, approximately, one third of cases involved some form of financial exploitation. This problem is expected to increase as vulnerable populations of senior with Alzheimer’s disease are projected to double, and perhaps triple, in number across the country by 2050.

An Elderly Woman Wearing Glasses and Reading a...

(Photo credit: Wikipedia)

In response to the projected increase in seniors targeted for financial abuse, several initiatives have been introduced. The initiatives, focusing on understanding the scope and size of the issue in order to create effective strategies aimed at combatting the abuse, include a Massachusetts special state commission tasked with investigating and making recommendations to the Governor’s office to strengthen protective services for elders.

The Commission, lobbied for by Massachusetts Representative Paul Brodeur, is expected to issue a report in January 2014, which includes a proposal establishing teams of financial experts who can serve as volunteer assistance in unraveling financial scams for the often overwhelmed protective service staff.

Specialists and legal experts have also come together to form the Center for Law, Brain, And Behavior at Massachusetts General Hospital, which, among other things, is focused on better understanding the changes in the brain, which can leave seniors vulnerable to undue influence in financial decisions.

More Information on Reporting Elder Abuse
Massachusetts Executive Office of Elder Affairs: Protective Services

Medicare Coverage: Going Home For The Holidays.

This week The Center for Medicare Advocacy  issued a timely reminder: patients in a Nursing Home may leave the facility to enjoy the holidays with family without losing their Medicare coverage. Medicare’s own Policy Manual instructs facilities not to tell patients that if they leave the facility they will lose their coverage.

If a nursing home resident leaves the facility for the day, but returns by midnight, the facility can bill Medicare for that day. If the resident leaves the facility, but does not return by midnight, that day will not be billed to Medicare, and is considered a temporary leave of absence.

The facility is allowed to charge the patient to hold their bed – called a “bed-hold” fee -during a temporary leave of absence. But, the facility must tell the patient ahead of time that they will be charged, tell them the cost of holding their bed, and the patient must elect to make the payment. Most of the time the bed-hold fee is worth paying. If a patient is well enough to leave the facility overnight, it is comforting for families to know their loved one can go back to the same bed, in the same facility, without having to go through any readmission process.

Center for Medicare Advocacy: You Can Leave the Nursing Home: Home for the Holidays (November, 2013)


Social Security Going Up 1.5% in 2014

The Social Security Administration announced today that benefit amounts will be increasing 1.5% starting in 2014. The 1.5% increase is based on the Cost of Living (COLA), and is one the smallest increases since automatic COLA increases started in 1975.

It is not a big increase, but is better than 2009 and 2010 when there was no increase at all. The largest increase was 14.3, which happened in 1980.

History of COLA Increases Since 1975

Social Security Administration Press Release

Estate Planning For Frequent Flyer Miles

There are lots of things people include in their Will or Trust: who will care for their minor children if they can not, special documents for disabled beneficiaries, even planning for pets. But how about those frequent flyer miles that have been collecting? Can you give those to someone when you pass away? Well, the answer seems to be a qualified “maybe.”


The formal policy for whether the miles can be passed on is found in the terms and conditions of the contract with each airline. Some airlines allow it, some do not, and some say they do not, but maybe the actually do – or at least they will if they do not know the owner has died.

In 2012, The New York Times asked six airlines about their policy on transferring miles upon the death of a member, and found that two have written policies allowing this: American and US Airways. JetBlue also allows transfers, but does not have a written policy. The transfer will be done upon request and within a year of death.

On the other hand, Southwest has a written policy that does not allow transfers of its RapidRewards when a member dies, but the account remains open for two years (see Tip 4 below for transferring miles using the account and password).

Delta’s official policy is to not allow the transfer, but until March 2013, had an affidavit on its website that would start the transfer process. That affidavit has now been removed, and here is an excerpt from the new Delta SkyMiles Membership Guide:

“Restrictions on Transfer

Miles are not the property of any Member. Except as specifically authorized in the Membership Guide and Program Rules or otherwise in writing by an officer of Delta, miles may not be sold, attached, seized, levied upon, pledged, or transferred under any circumstances, including, without limitation, by operation of law, upon death, or in connection with any domestic relations dispute and/or legal proceeding (emphasis added).”

So, given the various airline policies, is there anything you can do to try and ease the transfer or redemption? Since these miles may be worth thousands of dollars, it’s at least worth trying – despite what the written policy may say.  Here are some tips that may help:

1. Mention your frequent flyer miles in your Will or Trust.  You can either give them to a specific person, or give them to a group of people. For example, “I give my miles (or points) in my [name of program] to my spouse, if she survives me. If she does not survive me, I give this bequest, in equal shares, to my then living children.”

2. If you are on the receiving end of the transfer, do not wait too long. Even airlines that allow transfers may have deadlines. Also remember, depending on the airline, inactive accounts may expire after a certain amount of time – usually 24 -36 months – so even if you have the account number and password, the miles may be gone.

3. If you are claiming miles under a bequest, be prepared to provide a copy or original death certificate and a copy of the Will that has the language giving the miles. Some airlines will also want an affidavit signed by the designated beneficiary.

4. Keep a list of your frequent flyer account and passwords up to date and let family members know where they can find that information. Most airlines allow transfers using the online account, but may limit the number of miles able to be transferred.

5. If you are unable to transfer the miles out of the account, call the airline customer service department. Despite some written policies, a customer service representative may be more accommodating and willing to help.

Additional Information:

Reuters: Don’t Let Frequent Flier Miles Die With You (2013)

NY Times Article: The Afterlife of Your Frequent Flier Miles (2012)

Forbes: How to Pass On Frequent Flyer Miles (2012)

American Academy of Estate Planning Attorneys: Up-in-the-Air Estate Planning: Frequent Flyer Miles (2011)

Note: When I was writing this post, I was not sure whether to use “flier” or “flyer.” I noticed that my research showed both spellings seemed to be used interchangeably. So, I researched and found that either is acceptable. I decided that “flyer” was the better choice.  “Flier or Flyer