SSB
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In This Issue
Message from the Partners
Five (Non-Tax) Reasons to Create a Revocable Trust
Avoiding and Surviving IRS Tax Audits
Don't Forget to Plan for the Pets
Whats New?
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Quick Links
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To Contact Us
Samuel Sayward & Baler 
 
 858 Washington Street, Suite 202 
Dedham, MA 02026

 
Phone: (781) 461-1020 
Fax: (781) 461-0916
 
News from  
Samuel, Sayward & Baler LLC

April 2014

Attorneys Suzanne Sayward, Maria Baler, and Steven Joshua Samuel

 

Message from the Partners

 

Dear Clients and Friends,

 

Welcome spring! In this issue we begin by reminding you of the reasons you may want to include a Trust in your estate plan. While many people believe there is no longer a reason to use a Trust because of the recent change in federal estate tax law, Attorney Sayward points out there are, in fact, many non-tax reasons to do Trust planning. Her top five reasons are included in her article published in The Dedham Transcript in January.

 

And since this is tax season, Attorney Samuel talks about audits and offers some important tips on how to avoid that dreaded letter from the IRS. While there are no surefire ways to prevent an audit, there are specific steps you can take so you don't inadvertently do something that could get the attention of the IRS.  This is the time to be aware of all supporting documentation necessary for your tax returns, he points out, as well as why it's important to work with a professional.

 

Attorney Baler's article will get the attention of all you pet lovers.  She writes about the Massachusetts Pet Trust law that is now part of the year-old Massachusetts Uniform Trust Code, and other important steps you can take to plan for the care of your pet. 

 

In our What's New section, we are pleased to introduce the newest member of our team and show off some photos from our recently renovated office!

 

Thank you for reading another issue of News from SSB. If you have an idea for a topic you would like us to address in a future issue, please contact our office. We also welcome new subscribers so please feel free to send us email addresses or forward this newsletter to friends and family members!

 

Have a safe and enjoyable spring!

 

Steven Joshua Samuel

Suzanne Sayward

Maria Baler

 

 

Five (Non-Tax) Reasons to Create a Revocable Trust


By: Attorney Suzanne R. Sayward 
 
In my practice, I counsel clients about the various documents that comprise an estate plan such as Wills, Powers of Attorney, Health Care Proxies, and Trusts.  Many people are under the impression that there is no longer any reason to use a Trust since the recent change in the federal estate tax law means that only estates in excess of $5.25 million (increased to $5.34 for 2014) will owe federal estate tax.  Putting aside the fact that if you live in Massachusetts your estate may be liable for estate tax to the Commonwealth if it is valued at more than $1 million, there are a multitude of non-tax reasons to use a Trust as part of an estate plan.  Here are five of those reasons.

 

1.      You want to avoid probate.   Probate is the court process of transferring assets from a deceased person to the beneficiaries of his estate and giving the Personal Representative (formerly called executor) of the estate the authority to pay debts and taxes and distribute the estate assets.  The probate process can be costly and lengthy.  Further, probate is a public process, meaning that anyone can read the court file, including the deceased's Will, the Inventory of probate assets, and the Personal Representative's accounting of all of the estate revenue and disbursements.  Assets titled in the name of a Trust avoid probate and the related delay, expense, and lack of privacy. 

 

2.      You have young children.   Most parents shudder at the thought of their 18-year old son or daughter being given more than $1,000 to spend as the child sees fit.  Yet if these same parents die without having created a Trust to manage funds for the benefit of their children, those children will have unfettered access to their parents' assets, including the house, life insurance, and retirement funds at age 18.  Creating a Trust is an excellent way to ensure that assets are wisely managed for the benefit of children until they reach an age at which the parents believe they will have sufficient experience and maturity to manage their inheritance.  While a child's inheritance is held in Trust, the Trustee will have discretion 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. 

 

3.      One or more of your beneficiaries needs assistance managing money.  Even if your intended beneficiaries are all adults, there may be good reasons for restricting their access to funds. These reasons could include a shaky marriage, substance abuse, tax problems, poor money management skills, a risky business, creditor problems, an over-generous nature, or a history of bad judgment in relationships.   By creating a Trust that identifies the purposes for which a beneficiary's share may be used, you can ensure that your beneficiary has a safety net.  The Trust money could be used to pay for housing, health insurance, car insurance, or medical care that a beneficiary is unable to afford.  By stipulating that funds are to be held in trust, you can prevent the money from being spent foolishly or from being subject to the claims of your beneficiary's creditors.

 

4.      You have a child with disabilities.  Families who have a child with special needs must have a plan in place to ensure the child's needs will be met when the parents are no longer around to do so.  In addition, many people with special needs are eligible for public benefits that provide medical care or income for food and shelter.  Qualification for those benefits can be adversely affected if the person receives an inheritance outright rather than in trust.  It is not necessary to disinherit a special needs child to protect her eligibility for public benefits.  A Trust can maintain a child's eligibility for benefits after the parents' deaths.  Such a "Special Needs" 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 disabilities so that the child is not dependent 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 protecting your privacy.


This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

Avoiding and Surviving IRS Tax Audits
   
By: Steven Joshua Samuel, JD, MBA, AIF 

 

Fewer than one percent of all taxpayers are audited by the IRS each year. Taxpayers earning less than $200,000 annually are audited very infrequently, but one of every nine people earning more than $200,000 receive a dreaded IRS audit letter every year, according to the Wall Street Journal.

To reduce your chances of being audited, don't stand out from your fellow taxpayers! Make sure your tax return matches what is on your 1099s and other tax statements,  because the IRS looks for any discrepancies. Make sure you keep up with changes in tax laws that apply to you. For every charitable donation of $250 or more, the law now requires that you have both your cancelled check as well as a letter from the charitable organization dated around the time of your donation. And if you have outsized donations in any year compared with prior years, you still may get audited.  Don't try to pass off receipts from your hobby as business deductions.  Most important, consult an experienced tax professional for help in preparing your return and keep all supporting documents as well as a copy of the return.

Most IRS "audits" are notices of errors in arithmetic. According to the Wall Street Journal, the IRS sends about four to five million of these each year. If you receive one and agree to the amount requested by the IRS, replying within the time noted in the letter on your own with a check is safe. If you receive one of the more than one million other audit letters, plan your next steps thoughtfully.

The other audit letters notify the taxpayer either of an audit by correspondence or an in- person audit. Don't even think about replying yourself to either of these. Even if the audit appears to be about one or two very simple matters, replying yourself might raise attention to other more complex issues. Instead, it is well worth paying an experienced tax professional to reply on your behalf as quickly as possible.  Your tax preparer will likely communicate with the IRS by certified mail with return receipts requested, and should provide you with copies of all letters. Even for an in-person audit, the IRS may agree to conduct the initial meeting with just the tax preparer and it could end there.

Preparing your return and conducting all of your financial affairs with the guidance of tax and financial professionals will make the months of March and April much calmer and less appealing to an IRS audit.


Samuel Financial LLC is located at 858 Washington Street, 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.  Commonwealth does not provide legal or tax advice. Please consult with a legal or tax professional regarding your individual situation. www.samuelfinancial.com.

 

 

Don't Forget to Plan for the Pets

 

By: Maria C. Baler

 

In April 2011, Massachusetts enacted a Pet Trust law that allowed a trust to be created for the benefit of an animal;  previously, trusts could only be created for human beneficiaries.  This law is now part of the year-old Massachusetts Uniform Trust Code, and brings Massachusetts in line with 46 other states that also permit pet trusts.  Even if you don't feel the need to establish a trust fund to provide for the care of your pet after you are gone, you should consider the following steps to ensure the proper care of your pet if the unexpected happens:

 

  • Make sure you have a Durable Power of Attorney that allows funds to be expended to care for your pets in the event of your incapacity.
  • Identify an emergency caregiver for your pets to whom you can provide a key to your home, feeding and care instructions, the name of your pet's veterinarian, and information regarding any permanent care arrangements you have made for your pets and who to contact in that regard.
  • Advise your neighbors, friends, relatives, and your pet's veterinarian of the names of the emergency caregiver for your pets.
  • Obtain the packet prepared by The Humane Society of the United States entitled Providing for your Pet's Future Without You and use the tools provided, including wallet alert cards, emergency care instructions for your pets, window stickers to notify emergency responders that there are pets in the house, and, an emergency contacts form that can be hung in a visible location inside your home.

 

Taking these steps will ensure that your pets will be taken care of in the short term, until suitable long-term arrangements can be made.  If you are interested in more information about planning for your pets, or would like one of the packets mentioned above, please contact us.

What's New?

 

Welcome Pamela Doherty!

Pamela A. Doherty recently joined Samuel, Sayward & Baler LLC as a paralegal and we are very excited to have her with us!  Pam brings a wealth of knowledge and experience in the fields of estate planning and elder law.  Pam will be assisting Attorneys Baler and Sayward with client matters, including trust funding, finalizing estate plan documents, real estate matters, trust administration, and estate settlement matters. You can reach Pam at doherty@ssbllc.com or 781/461-1020 ext. 217.

 

 

New Look for the Office

Our office face-lift is just about complete and we love our new look! 

 

 

 

 

 

Samuel, Sayward & Baler LLC Website

Don't forget to check us out on the web at www.ssbllc.com including on your iPad and iPhone.  There you can read our latest blog post, peruse our prior newsletters and browse the articles written by our attorneys on topics such as Estate Planning and Divorce, points to consider when you own Non-Massachusetts Real Property and why you must proceed with caution when considering an Irrevocable Trust.