If you have questions about what is going to happen to the Estate Tax for people dying in 2011 and beyond, you are not alone. Just Google “estate tax.” I did, and got 179,000,000 results! In those results were the Internal Revenue Service Frequently Asked Questions on Estate Taxes , a poll being done by the Wall Street Journal asking How Much the Estate Tax Should Be, (not surprisingly, 63% of the poll voters think the estate tax should be repealed all together), and thousands of articles about the general mess Congress has created by not resolving this issue.

As most people know by now, without Congressional action, the federal estate tax is coming back on January 1, 2011. Unless Congress can come up with an alternative plan, have it pass both houses, and get it signed by President Obama, estates over $1,000,000 will be paying 55% in taxes. Although that may seem like a large estate, if you live in the Northeast, where property values remain higher than other parts of the country, many people are approaching that figure.

So what are people with estates over $1,000,000 supposed to do? The answer, I believe, depends on several factors:

How much over $1,000,000 is the projected estate?

If the estate is barely over the amount, allowed deductions from the estate may reduce the gross estate to below the $1,000,000 mark.

The age and health of the person doing the planning.

If the person is relatively young, it may just not make sense to start gifting money away. Congress may not be able to resolve this issue before January 2011, but may do so in the next few years.

For some older people with significant wealth, however, gifting may be the right choice. The gift tax rate this year, for amounts gifted over $13,000, is 35%. Still high, but lower than the 55% estate tax rate. “Gifting on the Rise as Rich Look to Duck 55% Tax”;

The current distribution plan for the estate.

If there are charitable bequests already incorporated into the plan, those bequests may bring the taxable estate below the $1,000,000 mark;

How much the person cares about the estate being taxed.

Some notable, very wealthy individuals are actually in favor of the estate tax. Bill Gates and Warren Buffett are two of the most quoted. “How Billionaires are Fighting Over Taxes” Although most people would prefer to avoid paying taxes, it may be that planning to avoid the tax is not what the client wishes.

Unfortunately, there is no simple answer for everyone with a taxable estate. If you have not heard from your attorney, it may be a good idea to give them a call before the end of this year and ask for a review of your estate plan distribution.

The Duties of an Executor in Massachusetts: Four Things You Need to Know

You have been named as an executor in a Massachusetts Will, and the person that made the Will has passed away. What are you supposed to do now? Adding to the grief over the loss of a loved one, the job of an executor may seem overwhelming. As the nominated executor, you have certain obligations to the heirs of the estate. There is no requirement that the nominated executor hire a Massachusetts probate attorney, although most nominated executors are more comfortable doing so.

Here are the basic steps that may help you understand the process and your job as the executor.

1. Getting Legally Appointed. A person named in a Will as executor is only nominated to be the executor. Until they are appointed by the probate court, the executor has no legal authority to access the estate of the deceased. For the executor to become legally appointed, the original Will, certified death certificate, Petition for Probate, Bond form, and Military Affidavit must be filed in the appropriate probate court. The Massachusetts Probate Forms may be found here

If the nominated executor does not live in Massachusetts, a Massachusetts resident must be appointed as the local Agent for the estate. If the executor hires an attorney, the attorney may be the local agent.

A copy of the death certificate and a copy of the Petition for Probate must be sent to the Office of Medicaid. The Office of Medicaid will check to see if the deceased was receiving Medicaid (MassHealth) benefits, and if so, will notify the executor that the state will make a claim for recovery of the funds.

Estate Recovery Unit
P.O. Box 15205
Worcester, MA 01615-9906

It generally takes about six to eight weeks from the time the papers are presented to the probate court to the time the executor becomes legally appointed. During that time, the executor has very little actual power over the assets of the decedent.

2. Protecting and Collecting the Estate: The executor’s primary job is to protect the property of the decedent for the benefit of the takers under the Will. After the executor is legally appointed by the probate court, they may order court certified copies of the appointment. This certified copy is the legal proof of appointment that most banks and brokerage firms request when the executor attempts to collect the assets.

After the executor has identified assets of the estate, it is usually advisable to start collecting them into a single “estate account.” This estate account may be a checking account, savings account, or a combination of both of these. The executor should be the only signatory on the estate account. The estate account will need a tax identification number assigned by the Internal Revenue Service. Neither the social security number of the decedent nor the executor should be used. IRS instructions on how to apply for a tax identification number.

If the decedent had an investment account, the executor should discuss with the advisor if any of the holdings should be redeemed for cash. Any cash from the sale of holdings are added to the estate account.

The estate account is used to pay any outstanding (undisputed) bills and maintain real estate.

3. Selling Real Estate: Once the executor is legally appointed, they have full authority to sell any real estate. If the real estate is sold, the proceeds from that sale are simply added to the estate account that has been set up.

4. Traps for the Executor: Most executors take their jobs seriously, and will do their best to accomplish what the decedent directed. There are, however, some common missteps even the most well-intentioned executor may make.

a. Co-mingling funds: The executor must never combine their own personal funds with the estate funds.

b. Making Early Distributions: Despite pressure from beneficiaries, the executor must be careful to make sure the estate has sufficient funds to pay any legitimate expenses and debts of the decedent. Creditors have one year from the date of death to file a claim against the estate. If there are no funds remaining, because the executor has distributed the money too early, the executor is personally responsible for paying that debt.

c. Not Following Direction for Personal Property: If the Will directs certain items of personal property be given to specific people, the executor must follow that direction. If they do not, the designated beneficiary may file suit against the executor.

d. Not Getting Receipts For Partial Distribution: If there appear to be sufficient funds, the executor may decide to distribute a portion of the estate before the one-year mark has passed. It is important that the executor have each person sign a receipt for the early distribution. This form should have a legal promise that the beneficiary will indemnify the executor should any creditor make a claim.

The Massachusetts Probate Process

Probate is simply the court process by which the terms of a Will are carried out by the person named as Personal Representative in a Will. The procedures discussed below are applicable for Massachusetts Estates. Other states may follow different steps.

Personal Representative Not Authorized to Act Until the Probate Court Accepts the Will and Appointment

Although a Will names a person as Personal Representative, until the proper procedures have been followed, the probate court considers the person named as merely nominated as Personal Representative. In order to have the nomination accepted by the court, certain documents must be filed and procedures followed. Once these papers and procedures have been followed, the Personal Representative is officially appointed and may start to act on behalf of the estate.

Getting Probate Started

The first step in the Probate process is to file the original Will, death certificate, Petition for Probate, Bond Application, and Military Affidavit in the local probate court. Generally, the appropriate court is the Probate Court for the county in which the decedent resided. Filing fees vary depending on which probate process is being initiated. This fee must be paid at the time of filing. Massachusetts Probate and Family Courts Filing Fees

A copy of the Petition for Probate and a copy of the death certificate must be sent to the Division of Medical Assistance, PO Box 15205, Worcester, MA 01615.

Once these papers have been filed and the filing fee paid, the court will send a Citation to either the attorney who opened the probate file, or the named Personal Representative if no attorney has been used. This citation is the legal notice that is published in the newspaper. The court will direct in which newspaper the Citation must be published, and a copy of the citation must also be sent to the heirs listed in the Petition for Probate.

The Citation has the date by which anyone who wishes to object to either the Will or the appointment of executor, must file their paperwork in the Probate Court. Unless an objection is filed, after the date specified in the Citation, the Will is considered accepted and the Personal Representative appointment becomes official. Court certified copies of the Personal Representative appointment may be ordered from the Court. Each certified copy is $25.00. Most financial institutions will want to see an original certified copy of the appointment of the Personal Representative, but most will be happy to make a copy and return the original.

For the complete statutory requirements for probating estates, see M.G. L. ch. 190B

Massachusetts Probate Court Forms

Basic Steps in a Chapter 7 Bankruptcy Process

The steps below are the basic steps for filing for Chapter 7 bankruptcy relief. Since everyone’s circumstances are different, however, please review the process with your attorney prior to any filings.


Income Qualifies for Chapter 7 – Next Steps


1. Debtor Education: There are two classes that must be completed before getting a discharge. The first class, Credit Counseling, must be completed before any papers can be filed with the court. The classes must be taken with a court approved agency, and that agency will issue a certificate after the course has been completed. This certificate will be included in the paperwork filed at the start of the bankruptcy process. The certificate is valid for 180 days after taking the Credit Counseling class. Massachusetts Approved Credit Counseling Agencies

The second class, Financial Management, must be completed before the court will order the debts discharged. This class must be completed within 45 days after the Meeting of Creditors. The cost is generally about $50.00 for each class, and can be done on the telephone or over the internet. Massachusetts Approved Financial Management Agencies Most court approved agencies offer both classes.

2. Filling out the Bankruptcy Petition: The bankruptcy petition is somewhat like a tax return. It has summary pages, followed by more detailed supporting information. On these forms will be listed income, debts, and assets. The asset section of the petition is where all assets will be listed and also where they will be protected. This protection is done by using the exemption amount allowed by selecting either the state or federal exemption amounts. Simply stated, although an asset may be listed, it may also be that you are allowed to keep everything that had to be listed. Some states, Massachusetts is one of them, allow a choice between using the federal exemptions or the state exemptions to keep your assets. That decision should be discussed with your attorney.

3. The Meeting of Creditors: after the papers have been filed with the court, a meeting will be set up by the bankruptcy trustee assigned to the case. This meeting is also known as a “341 Meeting.” Creditors are notified of this meeting, and have the option to attend and ask questions. In reality, rarely do creditors attend these meetings. The bankruptcy trustee runs the meeting and will ask the debtor a series of questions about the papers filed with the court. The bankruptcy trustee’s job is to determine if all assets have been included on the initial filing and whether there are any new assets that may not be protected. The meeting generally lasts for about ten minutes.

4. Getting to Discharge: Within 45 days after the Meeting of Creditors, if not already filed, a certificate showing that the second required Debtor Education class has been completed must be filed. Once that has been done, and unless there is an objection filed by a creditor, the court will issue a discharge within 60 days of the date of the Meeting of Creditors. This is usually the end of the process, and the case is closed.

Playground for Seniors

Where Seniors (and others) Can Go To Play


London recently opened its first playground for seniors. Playground for SeniorsThe purpose of the playground is to encourage people, seniors and those recovering from surgery, to exercise on the low-impact equipment, without having to commit to a gym membership. According to the article, these types of outdoor playgrounds are not uncommon in Europe.

There may not be a specific senior playground locally, but there are several wonderful options for seniors to participate in exercise programs geared for them.

  • The Jenks Center in Winchester offers exercise classes three times per week. Details may be found on the Jenks Centers web page: Jenks Center (click on Calendar to see the dates and times of the classes).
  • The Medford Council on Aging has both exercise classes and a Walking Club in the Spring and Fall. More information may be found on their web site: Medford Council on Aging, or by calling them at (781) 396-6010

Most Councils on Aging will offer classes geared specifically to older athletes. Not only do these classes have appropriate exercises, it is often a way to get out and participate in activities without making any long-term commitment to a membership. There are 348 Councils on Aging in Massachusetts, serving more than 400,000 families. A list of the Councils on Aging may be downloaded from the Massachusetts Executive Office of Elder Affairs.

Overview of Councils on Aging in Massachusetts

  • The Burlington Mall opens the Mall at 7:00 AM to people of any age who want to walk inside during inclement weather. “The Burlington Mall Heart and Soles Club” was established in 1991, and is free. More details may be found on the Burlington Mall Groups web site: Mall Walking. A full lap around the lower level equals .75 miles.

Many other Malls across the country open their doors early for walkers. To find out the times and requirements, call your local Mall for details on the hours and entrances to use.

Seniors and Bankruptcy

Most people are aware that the number of consumers filing for bankruptcy protection has grown dramatically over the last decade. A report released by the American Bankruptcy Institute simply confirms the numbers. According to a report published in AARP, the fastest growing population filing for bankruptcy protection is people over the age of 50. In 1991, people over the age of 55 accounted for eight percent (8%) of all bankruptcy filings. In 2007, that figure increased to 22 %. For people over the age of 75, the increase in filing percentage was even more dramatic: 567%.

There are many reasons for this increase in the need for bankruptcy protection: cost of living, health care expenses, and fixed income amounts combined with a dramatic decrease in investment returns.

Another problem area may be adult children and grandchildren. Before the current economic downturn, many parents routinely made gifts to children and grandchildren. Whether these gifts were done for estate tax planning or simply because they gifts were so needed, parents may have started a tradition they cannot continue. Unfortunately, even with dividend payments and interests rates sinking, many parents are not comfortable with telling their children they can no longer afford to make those same gifts. It is better to explain that previous gifting habits may have to be suspended rather than continue to make gifts that no longer consist of un-needed cash.


I Am Over 65, Should I Even File?


For people who are in financial trouble, that is the primary question. The answer is, “It depends on your circumstances”.

Filing may be beneficial if:

– Your credit card debt is more than you will ever be able to pay;

– You have no intention of ever applying for a mortgage;

– You are unlikely to apply for a job where a bankruptcy filing may disqualify you (e.g. bank teller);

– If you can eliminate the existing debt, you will be able to maintain a quality lifestyle.


Getting Beyond The Perception of Filing For Bankruptcy


Abraham Lincoln, P.T. Barnum, John Barrymore, Samuel Clemens (Mark Twain), Walt Disney, Debbie Reynolds, Johnny Unitas, and Burt Reynolds. These are just a few of the people that have declared – and survived – a bankruptcy filing.

Many people are concerned with the emotional aspect of what a bankruptcy filing may mean. However, the bankruptcy laws were enacted to give people a second chance – a clean slate to start again. The chance at a fresh start should not be limited to people less than 65 years old. Financial troubles can occur at any age and for a variety of reasons. For people over 65, the opportunity to increase their income is greatly reduced, and most seniors have already cut back on spending as much as possible.
If you are experiencing financial trouble, do not wait too long to consult with an attorney about whether a bankruptcy filing may be the best solution. Many attorneys will offer either a no cost or low cost consultation. The National Association of Consumer Bankruptcy Attorneys has a searchable web site.

Resources and Other Articles of Interest:

– Seniors Fastest Growing Population for Bankruptcy Filing

– Consumer Bankruptcy Filings Surge (AARP)

– Avoiding Bankruptcy (AARP). NOTE: I include this link for informational purposes. I strongly disagree with much of the advice contained in the body of the article. I disagree that bankruptcy should be a last resort and that credit consolidation agencies may offer solutions. It has been my experience that consolidation of debt for seniors is not a solution, and that waiting too long to file causes some people to continue to pay minimum payments for debt that could be completely discharged.

Chapter 7 Personal Bankruptcy

Chapter 7 bankruptcy is the type of bankruptcy most people think of when they hear the term “bankruptcy.” It is sometimes referred to as straight bankruptcy or a no-asset case. In its simplest form, a Chapter 7 bankruptcy filing will eliminate almost all of your debts, but may require you to forfeit some of your non-exempt assets to pay creditors. But, since all states and the federal bankruptcy laws allow a person to protect (exempt) assets, the reality is that in the majority of Chapter 7 cases, the debtor is able to keep all of their assets. The summary of the Chapter 7 Bankruptcy process below is not intended to be a “how to” guide. Please consult with your bankruptcy attorney, or if you are not using an attorney, check with the federal bankruptcy court on how to proceed with out an attorney. Information from the U.S. Bankruptcy Court, District of Massachusetts on Filing for Bankruptcy Without a Lawyer.

Eligibility to File for Chapter 7 Personal Bankruptcy:

Two methods to qualify for Chapter 7

Income is under the amount allowed

To be able to file for Chapter 7 bankruptcy, the person or household filing must have an income below the median income established for each state. To determine your income, add up all of your income for the last six months. Then add any other income sources from any other members of your household for the same six month period. NOTE: Do not include income received from social security, unemployment compensation, or transitional assistance.

After you have the total income number for the last six months, divide by six. This will give you the monthly income for the household. Then multiply the monthly number by 12 for the yearly income figure. To determine if that yearly income is below the amount that allows for filing a Chapter 7 bankruptcy in your state, click on this link: 2010 Median Income Levels:

The current income figures in Massachusetts are:

For a family of:

1 $53,315

2 $69,204

3 $82,297

4 $99,293

(Add $7,500 for each person over 4)

If the household income is below these amounts, eligibility for filing a Chapter 7 bankruptcy is established. If the income is over the amount allowed, there is a second step that may still provide for a Chapter 7 filing.

Income is over the amount allowed

If the income amount from the first step is more than the amount allowed, the second step is to deduct certain expenses from your income figure. This process is called taking the “Means Test.” Some of the amounts you are allowed to deduct are set by the IRS and local standards, and can be found here: National Means Test Deductions: Scroll down to section II, numbers 2, 3, and 4.

Massachusetts Housing and Utility Standard Deductions:

Northeast (including Massachusetts) Transportation Standard Deductions:

If after deducting the expenses, your net income (total income minus the allowed deductions) falls below the allowed income amount, there is one final step to determine if a Chapter 7 filing is possible. This is the budget analysis. If your monthly net income is greater that your expenses by $100.00 or more, a Chapter 7 filing is not possible. Instead, filing for relief under Chapter 13 is the option.