Partners' Letter
Dear Clients and Friends,
 
We love to hear from our clients, even if we most often hear from them only when they are having a problem they need us to help them solve.  It is important not to wait too long to call us if you are having an issue we can help with.  We're kicking off our first newsletter of 2016 with a reminder about some situations that warrant a call to us. "Five Reasons to Call Your Estate Planning Attorney," written by Attorney Baler and published in the Dedham Transcript in December, provides some guidance about situations, significant and less so, where we recommend you consult us so we can provide guidance and updates to your estate plan if appropriate.
 
Attorney Samuel  has written a great consumer piece about the January stock market drop and what to keep in mind when planning ahead.  He offers some specific questions to consider when speaking to your financial advisor. The bottom line, he says, is to make sure that your strategy is tailored to you and your goals.  We hope his detailed advice will help you plan better for a financially-sound year!
 
Attorney Greenfield has written about a topic that is getting increasing attention in the courtroom and in the press. "MassHealth's Treatment of Irrevocable Income Only Trusts" is an important update about the latest turn of events in this legal arena.  The challenge is that MassHealth has been inconsistent in denying and approving certain provisions and trusts, while the superior courts have yet to provide clarification or consistency for attorneys and consumers alike. We will continue to keep you updated and, as always, help you understand the facts -- the good, the bad, the truth.
 
And, even though you see a lot of blue on our stationery and website, please know we are becoming more green in our environmental office practices.  Attorney Sayward has written about the different ways in which we are streamlining our paper consumption and how several of those strategies are benefiting our clients.
 
Finally, please help us welcome Paul McGrann to our firm as an administrative assistant.   Paul is a Franklin Pierce University graduate and holds a degree in business management. We know he will be a valuable member of our team!  
 
As we enter our seventh year writing our newsletter, we are pleased that our readership continues to grow!  As always, we encourage you to send us ideas for future articles. Please feel free to send us email addresses for new subscribers or forward this newsletter to friends and family members.
 
Here's hoping that 2016 is off to a great start!
 
Steven Joshua Samuel
Suzanne R. Sayward
Maria C. Baler 
Five Reasons to Call Your Estate Planning Attorney
By Attorney Maria C. Baler

Estate planning attorneys try not to feel unloved or neglected. We realize that, although our clients like us, they don't always enjoy talking to us.  The conversations we have with our clients are sometimes difficult, filled with talk of illness, death, taxes, and challenging family situations. These are emotional topics that many people would rather not discuss, and instead ignore and hope the issues will resolve themselves.  However, as estate planning attorneys we are able to see firsthand how the advice and guidance we provide makes a difference in the lives of our clients and their families. 

Here are five reasons you should call your estate planning attorney:

1. You are diagnosed with a serious illness. If you are diagnosed with a terminal or chronic illness, sitting down with your estate planning attorney to talk about a time when you may become unable to make decisions for yourself or may pass away is probably not at the top of your bucket list.  However, now is exactly the time you should be having those conversations, as difficult as they may be.  Many types of illnesses will result in a period of incapacity.  It is important to plan for your incapacity and death while you are still competent to make decisions about your future.  A priority is to sign documents such as a power of attorney and health care documents that will ensure your health care wishes are known and trusted people are named to make financial and health care decisions on your behalf if necessary.  Your attorney can also advise you about whether ownership of assets or beneficiary designations should be changed, or estate plan documents should be updated. 

2. There is a death in the family.  There is generally no need to immediately call your attorney following a death in the family.  However, it is important to touch base with your attorney shortly after the funeral to determine what actions may need to be taken.  Real estate may need to be secured, cleaned out or sold.  Personal property may need to be distributed.  If the deceased owned assets in his or her individual name, a probate proceeding may be required to transfer those assets to the deceased's heirs.  If the deceased created a trust, a successor Trustee may need to be appointed and the trust administered according to its terms.  Depending on the size of the estate, an estate tax return may need to be prepared and filed, and estate tax may be due.  Although an estate tax return is not due until nine months after death, there can be significant work involved in identifying and valuing the deceased person's assets before the return can be prepared.  Your attorney can assist with all of these matters and is also likely a good resource for referrals to individuals who can assist with non-legal tasks, such as the clean-out of a home or the sale of real estate.

3. Your child is (or You are) engaged to be married.  A child's engagement is often a joyous time.  After the initial excitement has subsided, contact your estate planning attorney about whether you should be encouraging your child to enter into a prenuptial agreement prior to marriage.  Prenuptial agreements control the division of a couple's assets in the event of divorce or death.  They can be especially effective to protect assets one member of the couple owns prior to marriage (such as an interest in a family business or vacation home that may have been gifted by parents) and to protect inherited assets if a divorce occurs after the child has inherited assets from her parents. The timing of a prenuptial agreement can affect its validity.  The further in advance of the wedding the agreement is negotiated and signed, the better.  Discussing a prenuptial agreement is not easy when your child may be giddy with excitement over her upcoming wedding and you want to talk about death and divorce. However, a properly drafted and negotiated prenuptial agreement is a family's best defense against losing important family assets in the event of a divorce.  Prenuptial agreements are also important in second marriage situations where each member of the couple has assets they will be bringing to the marriage and may have children from a prior marriage to whom they would like to leave an inheritance. 

4. Your child is experiencing difficulties.  For many parents, it is difficult to confront the reality that a child may have substance abuse, gambling, or creditor problems, or may be in a bad marriage.  When these issues arise, it is appropriate for parents to take a hard look at their own estate plan and make changes if necessary.  Consider whether the child is still an appropriate candidate to serve in a fiduciary capacity or if the child's inheritance should be held in trust rather than distributed outright in order to protect assets for the child's benefit.  Your estate planning attorney can advise you about your options and help you decide what is best for your family's situation.

5. Minor Changes may still warrant a Conversation.  There are many less significant life events that still warrant a conversation with your estate planning attorney.  The birth of a child or grandchild should prompt you to check whether the new family member will automatically be included as a beneficiary of your estate (if that is your intention), or whether changes to your documents are necessary.  The purchase of a primary residence or a vacation home may necessitate updates to your power of attorney.   A conversation about whether or not to hold the new property in trust is also advisable, especially if the property is located in another state.

Even if your life is relatively uneventful and there is no new reason to talk to your estate planning attorney, keep in mind the importance of keeping your plan up to date.  If it has been more than five years since you have met with your estate planning attorney, take the time to sit down with your attorney to review your plan and ensure that it is consistent with your current goals.

Attorney Maria Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020.  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.
Key Questions to Ask When Investment Markets are Down
 
By Steven Joshua Samuel JD, MBA, AIF®

January 2016's stock market drop has caused investors to feel at least a bit anxious about what to do next.  Calling your trusted financial advisor is a good idea, although it sometimes results in a conversation that is very general about "staying the course" and not much more. Here are some specific questions to consider when speaking to your advisor.  They might help increase the bottom line of your investment accounts as well as ensure that your strategy is really tailored to you.

Is This Down Month a Market "Correction" or Something Else?

Even in years when investment markets do well, there are drops of between 10-20 percent that the industry calls "corrections" in stock prices. According to a recent report by Zacks, an independent financial research service, since 1980 the U.S. stock market has experienced an average yearly decline of minus 14.2 percent each year.   In 27 of the past 36 years, the market still finished with gains for the year. While there is no way to know for sure whether 2016 will end positive, January's ups and downs (12 percent drop and then 5 percent rebound to minus 7 percent) do not mean the market is headed straight down. Still, asking how your situation is being assessed will give you insight into your advisor's resources and education and how your investments are monitored.

Is My Investment Strategy Still Designed to Achieve My Goals With a Risk Level I can Tolerate?  

Your investment strategy boils down to what percentage you own in stock and fixed income investments. Stocks produce the gains needed to keep pace with cost of living over the years but also can produce losses. Fixed income investments, such as bonds, don't move up and down as much but provide smaller gains. During an economic upturn or average time, many of us overestimate how much risk we can tolerate, and January's down days are a good test of our thinking. If January's down days in the market leave you feeling you must sell to avoid more losses, your current strategy has too much risk. Reassessing with your advisor as soon as possible makes sense, as does considering whether any changes should be made now or after you allow some time for the possibility of investment markets recovering before selling at a low. On the other hand, if you are tolerating the down days well, you might consider adding to stock when prices are low and essentially "on sale."

Can I do Anything to Make the Downturn in Investment Markets Work to My Advantage?

When stock prices drop, the fear of further drops in prices motivates people to avoid buying any stock. Although this may make sense for investors with a short-time horizon, say for college expenses to be paid in the next few years, it makes less sense when investing for a retirement that is at least five or more years away. Increasing or at least continuing to contribute to retirement accounts (401k, IRA, 403B and others) in a downturn, when stock prices have dropped, is like buying them on sale.

Internal Revenue Service rules are helpful when stock prices drop sharply. Selling an investment at a loss in a taxable account (not an IRA, 401k or 403B) can offset tax on stock you want to sell and on which you've made a profit. If you don't use the whole taxable capital loss, you may carry it into future years until you can use it or deduct up to $3,000 in any year against ordinary income (e.g. earnings from employment). If you have a losing investment that you think will recover eventually, you may sell it to get the tax loss and after 30 days buy it back. There are additional ways you may use the tax loss rules that your tax advisor will explain to you.

Market downturns create an opportunity to convert traditional IRA accounts to Roth IRAs. Unlike traditional IRA accounts, Roth IRA accounts do not provide a tax deduction when you put money into them, but  they grow tax free and the owner is not required to take money out annually beginning at age 70 ˝ . Most important, there is no tax payable when money is withdrawn, ever. Converting from a traditional IRA to a Roth does require paying income taxes, but converting when account values have dropped means lower taxes, and, the amount of tax payable can be managed by converting a portion rather all of the IRA in a particular year.

One unusual IRS rule about converting to a Roth IRA is that if your IRA drops even further after you convert to a Roth, and you regret having converted it, you have until October of the next year to undo the conversion! It is important that money to pay the taxes on a conversion comes from somewhere other than the traditional IRA account, otherwise the taxes on that withdrawal will reduce the tax benefit of the conversion.

As always, consult a trusted financial and tax advisor on all  matters in this article and especially about converting a traditional to a Roth IRA and other tax issues. 

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.  
MassHealth's Treatment of Irrevocable Income Only Trusts as Murky as Ever

By Attorney Pam Greenfield
 
Often our clients come to see us to discuss their options for protecting their primary residence should they ever require long-term care in a nursing home. The conversation usually involves a discussion about the pros and cons of a transaction that would protect the home from the placement or collection of a MassHealth lien.  As elder law attorneys, we've always had a few different tools in our toolbox, which would fix the problem of the dreaded MassHealth lien.  Whether it was an irrevocable trust, a life estate deed or some other arrangement, there was a fix.

For the last two or three years, the previously well-settled law surrounding irrevocable income only trusts has been under fire by the Office of Medicaid.  Although there has been no regulation change or even a court decision carrying true precedential value, the agency has revamped its criteria for reviewing irrevocable income only trusts for individuals applying for nursing home MassHealth benefits.

The review standards seem to change daily and the pattern is unnerving-MassHealth denies a trust containing certain provisions one day and approves an identical trust the next.  Even worse, the superior courts, historically thought to be a place of refuge from unfair agency decisions, have yet to provide clarification or consistency.  Here's an example: In September 2014, two cases were heard by the exact same superior court judge in Worcester County.  The cases were based on the exact same trust and denied by the MassHealth agency for the exact same reasons.  The decisions-opposite!  In one case, the family home was safe and the elder received MassHealth benefits and the other, Roche V. Thorn, is currently on the Massachusetts Appeals Court's docket.  You couldn't even write this stuff for an episode of Law & Order!  As a result, the current climate makes it very challenging (if not impossible) to effectively prepare these instruments and assure our clients that they will actually be a good fix to the problem of the lien.

So far, 2016 does not bring with it any more knowledge or insight into the treatment of irrevocable income only trusts.  Late last year, the superior courts handed down the Daley and Nadeau decisions on December 24 and 29, respectively.  Both decisions focused on the grantors' ability to make use of the property held within the trust during their lifetime, although they approached  the problem from two different vantage points-one attacking irrevocable trust provisions and the other eluding to the fact that life estate deeds may be problematic (but that's a whole other blog post!).  With the Roche case pending at the Massachusetts Appeal Court and oral argument scheduled for next month, perhaps we will see some clarity later in the year.
 
For now, we sit in the shop, dusting off some old, less effective tools until we have more information about the future of irrevocable trusts (and, I suppose life estate deeds) in the MassHealth context.  Stay tuned and please feel free to give us a call to discuss your personal concerns regarding your irrevocable trust!
Samuel, Sayward & Baler Becoming More Environmentally Friendly

By Attorney Suzanne R. Sayward
  
Lawyers are notorious for their heavy paper use and we at Samuel, Sayward & Baler LLC confess to being among this group. However, we recognize that reducing the amount of paper we use is good for the environment, good for the firm and good for our clients! To that end, we are making some changes to reduce the amount of paper we consume. Although it is not realistic to expect that we will ever be completely paperless, we are becoming less papered.  Here are some of the changes we have made:
  • Outgoing correspondence is now scanned and saved; no paper copies of letters are printed.
  • We are offering clients the option to receive a summary of their estate plan rather than drafts of documents.  Clients who choose this option will meet with their Samuel, Sayward & Baler LLC attorney to review their documents prior to signing them.
  • For clients who prefer to receive draft documents prior to meeting with their attorney, we offer the option of sending those drafts electronically rather than printing and mailing paper drafts.
  • New clients, or clients who are updating with us, are given the option of using a "fillable" fact sheet so that they can provide us with their information electronically or by facsimile transmission.
  • Faxes are received through our computer system so that faxed documents can simply be saved to our system and never need to be printed.
  • Clients can choose to receive their final, signed estate plan documents electronically or on a thumb drive instead of receiving paper copies. 
Please be in touch if you have any questions or have ideas about how we can move toward being a "less-paper" law firm!
Staff News

Welcome Paul!

Paul McGrann has joined Samuel, Sayward & Baler LLC as an administrative assistant.   Paul is a Franklin Pierce University graduate and holds a degree in business management.  Paul answers our phones, seats and greets clients, and can help you if you want additional copies of any of your estate plan documents or if you want to update your contact information. If you want to pay your bill by credit card, call Paul and he will process your transaction. In addition to calling our main number, you can reach Paul at mcgrann@ssbllc.com. We are excited that Paul has joined us -- you can expect the same friendly attitude and excellent service from him that you do from the rest of the Samuel, Sayward & Baler LLC team!
 
 
If you are used to seeing Kenzie Sayward when you come into the office or enjoy speaking with her when you call, not to worry - she is still with the firm.  Kenzie will now be directly supporting our paralegals Karen Margeson and Janine Cronin.  Kenzie will contact you to collect information necessary to your estate plan or to follow up on other matters. You can reach Kenzie at kenzie@ssbllc.com or 781/461-1020 ext. 206.
Samuel, Sayward & Baler LLC, 858 Washington Street, Suite 202, Dedham, Massachusetts 
781-461-1020     www.ssbllc.com