In This Issue
Message from the Partners
Five Reasons to Create a Revocable Living Trust as Part of Your Estate Plan
Tax Relief Act of 2010
Federal Estate Tax Update
New Homestead Law Benefits Homeowners
Staff Update
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Samuel, Sayward &
Baler LLC 
 858 Washington Street, Suite 202
Dedham, MA 02026
Phone: (781) 461-1020
Fax: (781) 461-0916
News from
Samuel, Sayward & Baler LLC

January 2011

group attorney photo
Attorneys Suzanne Sayward, Maria Baler, and Steven Joshua Samuel 
Message from the Partners

Dear Clients and Friends,


We hope you and your family had a safe and happy holiday season.


In this issue we are featuring "Five Reasons to Create a Revocable Living Trust as Part of your Estate Plan," which was written by Attorney Maria Baler and published in The Dedham Times in December. This article is one of three in a series that focuses on helping readers understand the different types of Trusts and how they can be used in estate plans.  This month's column in The Dedham Times is on Irrevocable Trusts. In February, we will discuss the responsibilities of the Trustee. See the Staff Update section of thia newsletter for more information about our articles and how you can read them all.


Steven Joshua Samuel has written a financial update on the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the 2010 Tax Relief Act), which provides several taxpayer benefits, including continued favorable tax rates, a home energy efficiency tax credit, a payroll tax reduction, and more.  


Attorney Baler has written an update on the long-awaited resolution to the uncertainty surrounding the federal estate tax.  Congress took action on the estate tax as part of the 2010 Tax Relief Act.  She explains what those changes are and how they might affect your estate plan and financial situation.


And, some good news for homeowners! Attorney Suzanne Sayward's article on the new Homestead Law highlights the beneficial changes made in 2010 to that law, which give homeowners added protections. The article explains what those protections mean for homeowners and how they might affect you.


We hope you find this newsletter informative. As always, we welcome your comments and feedback about specific topics you would like to see in future issues. We also welcome new subscribers so please feel free to send us email addresses or forward this newsletter to a friend.


Best wishes for a very Happy New Year!  


Steven Joshua Samuel

Suzanne Sayward

Maria Baler

Five Reasons to Create a Revocable Living Trust as Part of Your Estate Plan 

By Attorney Maria Baler


Although Trusts are commonly used in estate planning, these documents are confusing to many.  To shed some light on this subject, the next three articles in this series will focus on Trusts.  In this article we will discuss the basics and importance of a Revocable Living Trust. Next month, we will discuss the use of Irrevocable Trusts. Finally, since family members are often named to serve as trustees, we will conclude with an article discussing the responsibilities of the trustee. 


A Trust is a legal document created to accomplish certain family, tax, or other financial objectives.  It is helpful to think of a Trust as a private agreement between the person who creates the Trust (called the "Donor" or "Grantor") and the person the Donor designates to manage the Trust assets (called the  "trustee") for the benefit of the Trust's "beneficiaries."  A living trust, sometimes called an inter vivos trust, is a Trust that exists and can own assets during the Donor's lifetime.  A testamentary trust is one created by the Donor's Will and takes effect only after the Donor's death.  A revocable trust can be changed or terminated by the Donor after it is created.  Revocable Living Trusts are used frequently, but that does not mean everyone needs one.  A Revocable Living Trust could be a good estate planning tool for you if it helps you achieve your goals. 


Here are five reasons to use a Revocable Living Trust as a part of your estate plan.



1.        You have young childrenIn most families, parents wish to leave their assets to their children after the death of both parents. However, if both parents die while a child is still young, the child will have full control over and access to his inheritance at age 18.  Most children do not have the experience to wisely manage large sums of money or real estate at age 18.  For this reason, many parents with young children create a Revocable Living Trust as a part of their estate plan.  Such a Trust typically provides that after both parents' deaths, the child's inheritance will be held in trust for the child's benefit and managed by a more experienced trustee.  The Trust document will specify the age or ages at which the child would be entitled to receive distributions from the Trust.  While a child's inheritance is held in Trust, the Trust will permit the trustee to use the Trust funds for the child's benefit, including paying for the child's education, helping the child to buy a house or start a business, or for any other reason the Donor/parent may specify.  Holding assets in Trust for a young child will protect the child from making unwise decisions and may also offer protection from a child's creditors.



2.                  You want to minimize the time and expense involved in settling your estate and preserve your privacyA probate court proceeding, often called "probate," is required to transfer assets that are owned by a deceased person at death to his or her heirs.  In Massachusetts, the probate process can take a year or more to complete and has been slowed in recent years by budget cuts which have reduced the number of court personnel.  Probate can be expensive due to the court filing fees and attorneys' fees involved in probating an estate.  Probate is also a public process, as the probate court file, including a list of the assets in the estate and their value, the expenses, debts and taxes that are paid by the estate, and to whom and in what amounts the estate assets are distributed, are all public record.  Assets owned by a living Trust at the death of the Donor will avoid probate and the related delay and expense of a probate proceeding.  Living Trusts are also private documents, which are not filed with the Court or made a part of the public record, maintaining the privacy of the Donor and the beneficiaries.



3.                  You want to reduce estate taxes. Estate taxes may be payable at death if the value of the assets (including life insurance, retirement accounts, real estate, investments, cash, etc.) owned by the deceased person exceeds $1 million.  A certain type of revocable living Trust, called a "credit shelter trust," can be used by married couples to reduce the estate tax payable after both spouses' deaths. This type of revocable living Trust can maximize the value of the assets passing to children or other heirs provided the Trust is properly created and funded prior to death.



4.                  You have a child with special needsFamilies who have a child with special needs must have a plan in place to ensure the child's needs will be met in the future.  It may be important to ensure assets will be managed for the child's benefit for her entire lifetime as the child may never be capable of managing assets.  Further, many people with special needs are eligible for public benefits that provide medical care or income for food and shelter expenses.  Qualification for those benefits can be adversely affected if the special needs child receives an inheritance from a parent.  It is not necessary to disinherit a special needs child to protect her eligibility for public benefits.  Trusts can be used very effectively to maintain a special needs child's eligibility for benefits after the parents' deaths. Such a "Special" or "Supplemental Needs" Trust can also provide long-term management of the child's inheritance and additional resources to meet the child's needs that are not addressed by the public benefits she may be eligible to receive.  These types of Trusts provide an important safety net for a child with special needs that does not depend on the goodwill or good fortune of siblings or other family members.



5.                  You want to ensure that your assets are properly managed for your benefit if you become incapacitated.  An effective estate plan includes planning for how you will be cared for and how decisions will be made in the event you become incapacitated.  By creating and funding a Revocable Living Trust of which you are the beneficiary during your lifetime, you provide a mechanism for your assets to be managed and used for your benefit during any period of incapacity that occurs during your lifetime by a Trustee that you choose.  This type of planning may avoid the need for a guardianship or conservatorship proceeding in the Probate Court while maintaining your privacy.










Tax Relief Act of 2010


By Steven Joshua Samuel


The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was signed into law on December 17, 2010. Key provisions of the Act and ways to put them to good use include:


Payroll taxes are reduced 2 percent in 2011 and 2012. Review your paystub to be sure this recent change has been implemented. Put the extra dollars to use by paying debt or contributing more to a 401k retirement account.


Long term capital gain for taxpayers in the 10-15% tax bracket is still zero percent  

(yes, zero). If you give your adult children financial help in 2011, transfer stock on which you have a long term capital gain to them. When they sell the stock, there is no capital gain tax unless their income puts them in the 25% tax bracket.


Charitable contributions from IRAs satisfy the annual Required Minimum Distribution, tax free. Taxpayers over 70 are required to take a minimum distribution. If the required amount is sent directly to a charity from the IRA account, no tax is due and no additional withdrawal from the IRA is required.


Home Energy Efficiency Tax Credit up to $500 applies for 2011. If you haven't already taken advantage of the tax credit for installing energy efficient furnaces, windows, doors and other qualified items, a $500 tax credit is available. Use the credit to reduce your home heating costs and knock $500 off your tax bill.


For a more complete list of the many other deductions and credits which have been extended into 2011 and 2012, see this month's featured article on the Samuel Financial, Inc. website, and as always, consult a qualified tax and financial advisor.


Samuel Financial, Inc. is located at 858 Washington St. Dedham, MA 02026 and can be reached at (781)461-6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser.

Highlights of the New Federal Estate Tax Law 


In mid-December 2010, Congress passed and the President signed the long-anticipated 2010 Tax Relief Act which includes changes to the federal estate tax.


Highlights include:     


For estates of those who die in 2011 and thereafter

The new law reinstates the federal estate tax but provides for a federal estate tax exemption of $5 million per person.  The new law also reunifies the estate and gift tax exemption amounts, permitting the $5 million exemption to be used to transfer assets estate- or gift-tax-free either during lifetime or at death.  The $5 million exemption will allow the vast majority of people to pass their assets to their heirs without the payment of federal estate tax.


For estates of those who died in 2010

The new law retroactively applies the new estate tax law to estates of those who died in 2010.  However, executors of those who died in 2010 have the option of electing out of the federal estate tax and accepting the carry-over basis provisions that were in effect for 2010 estates prior to the enactment of the new tax law.   In general, this option will be important for estates with a value of $5 million or more.


And Now For Something Completely Different

For the first time, the new tax law introduces the concept of "portability" of the estate and gift tax exemption for married couples.  This allows the unused estate and gift tax exemption of either spouse to be portable, meaning the unused portion may be used by their surviving spouse during his or her lifetime or at death.  


Step-Up in Basis Reinstated

Along with the new federal estate tax comes the old concept of a step-up in basis for inherited assets for capital gain tax purposes, meaning those inheriting assets from a deceased person will inherit capital assets with a basis equal to the value of the asset on the date of death of the deceased owner.


Estate Tax Rates Reduced

The new law sets a flat estate tax rate of 35% for transfers in excess of the $5 million exclusion amount.


What does this mean for your Estate Plan?

In Massachusetts, we are in the somewhat unique situation of having a separate state estate tax which is computed and administered based on the federal estate tax laws of 2000 and is unaffected by the recent change in the federal estate tax.  Therefore, estate tax planning for Massachusetts residents must address both the Massachusetts and federal estate tax. 


Credit Shelter Trusts are the basis for much of the basic estate tax planning we do for our clients.  Keep in mind that credit shelter trusts are still necessary to shelter assets for Massachusetts estate tax planning purposes, even with the size and portability of the new federal estate tax exemption.  In addition, credit shelter trusts may offer a greater "shelter" from tax than the portable federal estate tax exemption if the assets are expected to increase in value during the surviving spouse's lifetime.  Note that credit shelter trusts that were not created or amended after 2003 must be reviewed and may need to be updated, as the language in these trusts may create a situation where estate tax could be payable to Massachusetts at the death of the first spouse, even if no federal estate tax is due. 


It is therefore more important than ever to have your plan reviewed to determine if your documents are drafted to take advantage of the tax savings strategies afforded by these different estate tax laws.  Equally as important is a review of how your assets are owned and how beneficiaries of life insurance and retirement assets are designated, to ensure that your assets will be distributed as you intend under the terms of your estate plan.


Stay tuned

As with the prior estate tax law, this new law "sunsets" on December 31, 2012, after which time the "old" law, with its $1 million federal exemption amount and top estate tax rate of 55%, will be reinstated unless Congress acts to extend the new law or make it permanent.

New Homestead Law Benefits Homeowners 


A new law regarding Homesteads was passed by the state legislature in December, 2010, and will become law on March 16, 2011.   


The highlights of the new Homestead law are as follows:


1.      It provides for an automatic homestead exemption in the amount of $125,000 per property for an owner(s) who does not formally declare a homestead.

2.      It confirms the existing $500,000 homestead exemption per property for a declared homestead, however elderly (over age 62) or disabled homeowners are entitled to an exemption of $500,000 per owner.

3.      Homestead protection is now available to homes held in a trust.

4.      Homestead protection is not affected by the refinance of an existing mortgage on the property, although the homestead protection will be subordinate to the mortgage.

5.      Homestead protection applies to the proceeds from the sale or taking of a home, or funds received following a fire or casualty loss, for a period of time following that event.

6.      Attorneys who close mortgage loans on behalf of banks or other lenders in Massachusetts must notify borrowers in writing of the right to declare a homestead  on the property.


All existing Declarations of Homestead continue in force under the new law, with the benefit of the provisions of the new law as applicable. 


The new law underscores the importance of filing a Declaration of Homestead on your home to take advantage of the increased homestead exemption for a declared homestead vs. the automatic homestead protection.


Here at Samuel, Sayward & Baler LLC we are particularly excited about the provision of the new law, which allows homeowners to have the benefit of the Homestead while owning their property in a Trust. Under the old homestead law, homestead protection was not available to property owned by a Trust and therefore clients had to choose between the homestead protection and the probate avoidance benefits of owning property in Trust.


 If we have previously advised you to keep your home in your individual name(s), rather than in a Trust so that you would have the benefit of homestead protection, you can now consider conveying your home into a Trust without losing the benefit of the homestead exemption.  We will be reminding our clients about this in our annual update letter to review their estate plan documents.  There may be other factors involved in a decision to convey property to a Trust, and the decision to do so should be made only after consultation with your estate planning attorney.

Staff Update   
Attorney Baler named MassNAELA 2010 Member of the Year


Attorney Baler was selected as the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA) 2010 Member of the Year for her contributions to the Chapter as chair of its program committee.  She was also elected to a second two-year term on the Board of Directors for MassNAELA. 


Partners as Contributing Columnists


For more than a year, the partners from Samuel, Sayward & Baler LLC have had the privilege of contributing a monthly column to the print and online version of The Dedham Times and other community newspapers. We recently learned our online articles have been ranked as one of the top five that are read on a consistent basis. We are pleased to help educate readers about important legal and financial issues and look forward to helping them stay informed in 2011.


To read our columns visit and click on Articles.