The DJT Blog

CHOICE OF TRUSTEE One of the most difficult and important tasks in preparing a trust for an individual is the selection of a trustee or trustees to manage the trust. Proper management of the trust can make a huge difference in the beneficiary's quality of life for years to come, if not for her entire life. Generally, there are three categories of trustees. Family/friends, Professional Trustees and Professionals serving as trustees (i.e... Attorneys and Accountants). Here are seven issues I have asked them to consider in making their decision: Temperament. Personalities to avoid as Trustees include emotional, confrontational, and dogmatic. Family and friends might sound good at first but if there is a potential for conflict of interest or excessive emotions you want to weight the value of retaining family harmony. Cost. Many people fear using a professional trustee -- trust companies, banks, attorneys, accountants -- due to the cost. Professional trustees usually charge between 1.0 and 1.5% of assets under management, the fee decreasing as the trust funds increase. Over time, these costs can add up, but not nearly as much as the cost of bad management. To put these costs in perspective, they are often the same or less as financial advisors or mutual fund companies charge, and they do not take on any of the fiduciary responsibilities of trustees. Alternatively, many attorneys’ fees will be the same as their hourly fees for any client. Number. In some case, clients are comfortable simply naming their son or daughter as the sole trustee but are nervous about what that might do to their relationship with other family members. Another trustee (co-trustee) would allow them to share decision-making and responsibility (and blame, perhaps), as well as the workload. It would also provide redundancy if one of the trustees was unavailable for any reason. While it makes a lot of sense to have more than one trustee, more than three starts to get cumbersome. While any single trustee can act for the trust in terms of writing checks and directing investments, they must be carrying out the decisions made by all the trustees. Keeping everyone in the loop and making joint decisions all the time can be difficult if too many people are involved. Stability . Trusts can last a long time. Will the person you appoint be able to provide the necessary attention to the trust for years or decades? Will they be able to keep up with the often-tedious jobs of paying bills, filing tax returns, and preparing accounts? Since we cannot be certain of the answer to this question if when appointing an institution -- banks get bought and sold, sometimes with ill effect on their trust departments -- the trust must include a mechanism for changing trustees. Financial acumen. The trustee will need to manage trust investments and spending, taking into consideration the needs and interests of both current and future beneficiaries. Trying to balance their current and future needs can be difficult. They may have $1 million in trust, which seems like a lot of money (perhaps not what it used to be), but to make sure that the fund keeps growing with inflation, they need to limit their trust withdrawals to $30,000 to $40,000 a year. This may seem incongruous with so much money invested, but otherwise the buying power of the trust will diminish and ultimately the trust could fall into a "death spiral" as the beneficiary must dip into larger and larger amounts of trust principal to make ends meet. Organization. In addition to all of the factors mentioned above, at least one of the trustees needs to be very well organized in order to meet all of the trustee responsibilities -- making distributions, providing account statements to beneficiaries, reviewing investments, filing timely tax returns. Personal touch. While cost is one reason many clients avoid using professional trustees, another is fear of working with an institution rather than an individual who personally knows the beneficiaries' situations and needs. This can be especially off-putting if the institution has experienced significant turnover in personnel. We've had cases where a parent chose a local banker to serve as trustee only to have that bank bought by a statewide bank which was bought by a regional bank which, ultimately, was bought by a national bank. In the end, the children were dealing with trust officers in another state. This is another reason it's important for all trusts to have a mechanism for changing trustees. As you can see, neither the choice of trustee nor the chosen person's decision to accept the appointment, should be taken lightly. Each client’s decision will be made based on his unique situation, including the available family members and friends, the likely longevity of the trust, the amount of assets under management, and other factors. We find that the combination of a professional trustee who can take care of the administrative side of the trustee's role and a family member who can bring the personal touch often works best. In a practical sense, the professional trustees are more often and attorney because many of the institutionalized trusteed are either cost prohibited or decline to serve because the trust assets are too small. Professional Trustees For large sized trusts (commonly of $1.5 Million in non-real estate holdings), due to the complications of the trustee's role, we strongly urge clients to consider professional trustees such as trust companies, and banks. They are equipped to handle the investment, accounting and tax sides of trust operations and can do so with little risk or difficulty. They should be better equipped to fend off inappropriate requests for distributions and to deal with conflicts of interest. On the other hand, many professional trustees are ill-equipped to deal with the issues presented by beneficiaries with special needs, whether they be eligibility for public benefits or responding to sometimes frequent requests for distributions for unusual purposes. They may be more comfortable simply managing trust assets. Anyone selecting a professional trustee must ask about the prospective trustee's experience with special needs trusts and their methods for responding to these questions. When a large institution is serving as trustee, an inexperienced trust officer may be assigned to the account. He may have little experience dealing with special needs issues. And the person assigned may change over time as employees come and go and, in the case of many banks, as the identity of the bank itself changes from one to another. This can be extremely frustrating for beneficiaries and their families. Attorneys as Trustees For trusts of any significant net worth you can consider using a professional trustee such as an attorney. Attorneys don’t charge as much as institutionalized trustees and will handle much smaller trusts. Attorney also may have some history with the family especially the grantors which may aid the attorney in understanding the grantor’s purpose of having the trust. Attorney’s can also serve as a co-trustee with a family member and allow for the separation of work between trustees. Family Trustees Choosing family members and friends as trustees also has advantages and disadvantages. The advantage is that these are people who know and care about the beneficiary and may be able to you the trust funds to provide the greatest benefit for the person with special needs. Many clients are reluctant to give up control to an unknown third party. A further perceived advantage is that family members normally don't charge for their services. The reality, however, is that trustee fees - typically about 1 percent of trust assets per year, with a minimum for smaller trusts - is very reasonable given the services provided. The risk that a family member trustee will make mistakes or not be able to follow through on the basic trustee responsibilities of prudent investment and accounting are so great that the trustee fee can simply be seen as reasonably-priced insurance. Even the most skilled and responsible family member with the best of intentions may not be able to follow through on all the trustee details given the press of other matters in her life. In short, to appoint a family member is both a large compliment and placing a large burden on her shoulders. Co-Trustees Clearly, there are problems with both family trustees and professional trustees. One solution which we have used with success in our practice is co-trustees - both a professional and family member trustee working together. This can be the best of both worlds. Everyone can rest easily knowing that the basic trust functions will be carried out by the professional trustee. But the family member trustee will be on the scene to make sure that the trust is used to best serve the beneficiary. So, You've Been Appointed Trustee, Now What? You have been asked to serve as trustee on the trust of a family member. This is a great honor meaning that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands. However, it is also a great responsibility. You need to go into it with your eyes wide open. Fiduciary Responsibility. As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust, both the current beneficiaries and any “remaindermen” named to receive trust assets upon the death of those entitled to income or principal now. As a fiduciary, you will be held to a very high standard, meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts. May I read the trust? The trust document is your instruction manual. It tells you what you should do with the funds or other property you will be entrusted to manage. Make sure you read it and understand it. Ask the drafting attorney any questions you may have. The Trust’s Terms. Read the trust itself carefully, both now and when any questions arise. The trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries. What are the grantor's goals? Unfortunately, most trusts say little or nothing about their purpose. They give the trustee considerable discretion about how to spend trust funds with little or no guidance. Often the trusts say that the trustee may distribute principal for the benefit of the surviving spouse or children for their "health, education, maintenance and support." Is this a limitation, meaning you cannot pay for a yacht? Or is it a mandate that you pay to support the surviving spouse even if he could work and it means depleting the funds before they pass to the next generation? How are you to balance the needs of current and future beneficiaries? It is important that you ask the grantor while you can. It may even be useful if she can put her intentions in the form of a letter or memorandum addressed to you. Investment Standards. Your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries. For instance, you may have a current beneficiary who is entitled to income from the trust. He or she would be best off in most cases if you invested the trust funds to generate as much income as possible. However, this may be detrimental to the interest of later beneficiaries who would be happiest if you invested for growth. In addition to balancing the interests of the various beneficiaries, you must consider their future financial needs. Does a trust beneficiary anticipate buying a house or going to school? Will she be depending on the trust income for retirement in 15 years? All these questions need to be considered in determining an investment plan for the trust. Only then can you start considering the propriety of individual investments. Accounting. One of your jobs as trustee is to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure. In strict trust accounting, you must keep track of and report on principal and income separately. Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a “grantor” trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes. In many cases, the trust will act as a pass through with the income being taxed to the beneficiary. In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem. Delegation. While you cannot delegate your responsibility as trustee, you can delegate all the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation. With such professional assistance, the job of trustee need not be difficult. However, you still need to communicate with those you hire and make any discretionary decisions, such as when to make distributions of principal from the trust to one or more beneficiaries. Distributions. Where you have discretion on whether or not to make distributions to a beneficiary you need to evaluate his current needs, his future needs, his other sources of income, and your responsibilities to other beneficiaries before making a decision. And all these considerations must be made in light of the size of the trust. Often the most important role of a trustee is the ability to say “no” and set limits on the use of the trust assets. This can be difficult when the need for current assistance is readily apparent. Fees. Will I be compensated? Often family members and friends serve as trustees without compensation. However, if the duties are especially demanding it is not inappropriate for them to be paid something. The question then is how much. Professionals generally charge an annual fee 1 percent of assets in the trust or on an hourly basis or some combination. So, the annual fee for a trust holding $1 million would be $10,000. Often, they charge a higher percentage of smaller trusts and a lower percentage of larger trusts. If you are doing all the work for a trust including investments, distributions, and accounting, it would not be inappropriate to charge a similar fee. However, if you are paying others to perform these functions or are acting as co-trustee with a professional trustee, charging this much may be inappropriate. A typical fee in such a case is a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). In any case, it is important for you to read what the trust says about trustee compensation and discuss the issue with the grantor.  If after asking these questions you feel comfortable serving as trustee, then accept the role. It is an honor to be asked and you will provide a great service to the grantor and beneficiaries. This can serve as only an introduction to your duties and responsibilities as trustee.

Credit Shelter Trusts for Massachusetts Residence Credit shelter trusts are a way to take full advantage of Massachusetts estate tax exemptions. Being a Massachusetts resident we have been very lucky in terms of the appreciation of our real estate and many of my clients don’t realize that they are “millionaires” just by starting to look at their “worth” from their real estate. Massachusetts Estate Tax Laws have two major differences from the Federal Estate Tax Laws. An Individual who passes away has a $2.0M Exemption before their estate/beneficiaries will owe an estate taxes. The FEDERAL lifetime gift/estate tax exemption is $13.99 million in 2025. The lifetime gift/estate tax exemption is projected to be $7 million in 2026. Massachusetts does not allow for “portability”. The Federal law does. Portability means that spouses may share in their individual exemption, essentially doubling it. So presently a married couple could exempt up to $28M if one of them died in 2025. To have portability requires that the surviving spouse, elects it by filing a Federal Estate Tax Return for the deceased spouse even though no tax may be due). In Massachusetts the best way to replicate the benefit of portability is the use by both spouses of separate credit shelter trusts. The way to preserve both spouses' exemptions (so potentially $4.0M vs $2.0M) has been to create a "credit shelter trust" (also called an A/B or bypass trust). Simplistically if a couple is worth $3.0M or $4.0M when the first spouse dies and after the surviving spouse is worth $3.0M or $4.0M then when the second spouse dies (assuming the same net worth) the estate tax would be $99,600 for $3.0M and $182,500 for $4.0M. By using these credit shelter trusts, which are unique to married couples, they will use $4.0M in exemptions instead of only having the benefit of $2.0M when the second spouse passes. Standard estate tax planning is to split an estate that is over the prevailing state or federal exemption amount between spouses and for each spouse to execute a trust to "shelter" the first exemption amount in the estate of the first spouse to pass away. While the terms of such trusts vary, they generally provide that the trust income will be paid to the surviving spouse and the trust principal will be available at the discretion of the trustee if needed by the surviving spouse. Since the surviving spouse does not control distributions of principal, the trust funds will not be included in her estate at their death and will not be subject to tax. This way, in Massachusetts the couple can protect up to $4 million from estate taxation while still making the entire estate available to the surviving spouse if needed. The rising federal estate tax exemption means that many older trusts drawn up for married couples contain outdated estate-splitting provisions that may cost them dearly in state or federal taxes, or both. As recently as 2020, if you have retirement funds landing in a trust after your death, it is almost a guarantee the language in your trust will not be up to date unless it was amendment after January 1, 2020. Couples would do well to have their revocable trusts that contain credit shelter provisions reviewed by a competent professional. If you're interested in learning more about CST, contact our office today !

Which Legal Planning Documents Do You Really Need For an Appropriate Estate Plan? Whether you are married with children or a single adult, you should have an Estate Plan to protect your assets, loved ones and personal care in the future. What legal documents do you need to have an appropriate Estate Plan? Everyone is different and estate planning is unique to everyone, so it is difficult to generalize. However, most of us need the first four of the fundamental legal documents referred to below. More and more of us need a Trust of some kind but the specifics of why you need a trust and what kind of trust requires more discussion: Durable Power of Attorney Health Care Proxy A Will HIPAA Release Living Trust Credit Shelter Trust Version if you are married and have a net worth in excess of $2,000,000 combined. Joint Marital Revocable Trust if net worth is less than $2,000,000 Individual Revocable Trust if not married. (Primarily for Long-term Care Protection you would consider an Income Only Irrevocable Trust ) (Another trust called an Irrevocable Life Insurance Trust(ILIT) is used solely so the death benefits are not included in your Estate for Estate Tax Purposes) A Durable Power of Attorney The Durable Power of Attorney is a written document which allows you (the Principal) to designate someone you trust (the Attorney-in-Fact) to make Personal, Business and Financial decisions for you in the event of illness or incapacity. The Durable Power of Attorney allows you to name someone who could take over your personal finances, pay your bills, sign a deed or bill of sale, sign you in or out of a hospital or rehabilitation hospital, make gifts, deal with the IRS, deal with your insurance company or stockbroker, purchase an annuity or engage in Medicaid or long-term care planning on your behalf. A well-drafted Durable Power of Attorney will enable your Attorney-In-Fact to do anything you could as if you were personally present. A Durable Power of Attorney can be broadly defined, or it can be very specific. It depends upon what one wants or needs. A Durable Power of Attorney does not necessarily take effect at the time of signing. A Power of Attorney can "spring" into effect only upon the principal's incapacity or disability whether sudden (an accident or a stroke) or gradual (Alzheimer's disease or mental weakness/illness). A Durable Power of Attorney should be signed while one is in good health. It is preferable to have discussed the Durable Power of Attorney beforehand and make sure the Attorney-In-Fact named in the document agrees to serve and understands what he or she is expected to do. A Durable Power of Attorney needs to be witnessed and be signed in the presence of a Notary Public. A Durable Power of Attorney has its drawbacks. If it is too old a bank or investment company may not accept it. If it does not reference the particular use that you need it for, its intent may also fail. Even if you have a Durable Power of Attorney, you should have it reviewed every three years to see if it is still sufficient. Health Care Proxy A Health Care Proxy is a relatively straightforward legal document that one signs designating another person to make any and all care decision for him/her in the event of illness or incapacity. The person who is appointed is called a health care agent. The agent is authorized to act only if the attending physician determines in writing that you lack the capacity to make or communicate health care decisions. The decision-making authority includes the authority to make decisions about life sustaining treatment. Again, similar to the Durable Power of Attorney a properly drafted Health Care Proxy will have sufficient detail to cover most if not all consequences. A general announcement naming someone to make all medical decisions for you is not sufficient. A Will A Will is a document which, among other things, directs how your property will be disposed of after your death. It is also used to name a Guardian for your minor children in the event of a simultaneous death. The Will also allows you to choose the person or persons who you want to manage your Estate. If you do not have a Will, your property will be distributed according to the Statutory Laws of the Commonwealth, which may or may not be in accord with your wishes. Additionally, virtually anyone, including your creditors, could petition the Probate Court for permission to administer your estate if you have not appointed an Executor through a Will. The use of a Will is part of the Probate Process it DOES NOT AVOID PROBATE. HIPAA Release A signed HIPAA release form must be obtained from a patient before their protected health information can be shared with other individuals or organizations, except in the case of routine disclosures for treatment, payment or healthcare operations permitted by the HIPAA Privacy Rule. A HIPPA Release would allow your spouse, children or whomever is named in it to converse with your doctors about your condition. It does not allow them to make any health decisions, those are left to the person named as your Health Care Proxy. A Living Trust (revocable) A Living Trust is a document by which a person legally transfers ownership of certain property to another party to be held and managed for his or her benefit or for the benefit of others. The person who establishes The Trust is the Donor. A Living Trust, so called, is a trust that is established and takes effect while one is alive as opposed to a Testamentary Trust which is established in a will and only comes into being upon death. A Living Trust is often times revocable - meaning - the person who created it can revoke it. It also can be amended from time to time as situations and circumstances change. By placing property in a Trust, a Trustee is legally responsible for management of the Trust property. A Trust serves to avoid Probate upon the death of the Donor, as the Trust Assets are not in one person's name at the time of death. Unlike a Will, a Living Trust need not be filed with the Registry of Probate. One similarity of a Will and Trust is that the Trust can provide to whom the Trust assets will go upon the death of the one who created the trust (the Donor). One of the differences between a Will and the Trust is that the Will takes effect when you die. The Living Trust, on the other hand, can be established while you are alive, and the Trustee will hold your assets and manage them during your lifetime. The Executor of your Will can only distribute your assets to your heirs at the time of death. The Trustee can manage the Trust in both instances - while you are alive and following your death. A Living Trust provides needed flexibility to deal with changes over the years. It provides, as does a Will, a means to provide protection for handicapped, disabled, or mentally challenged family members or loved ones. It can protect a financially irresponsible beneficiary. It allows one to make specific arrangements for children or grandchildren from a prior marriage. A Trust can also be used to avoid or reduce estate taxes. EXAMPLES: I am asked for generalities: I don’t like generalities because each person, each couple are unique in my mind and the difference between being a document drafter and someone who provides an estate plan is understanding the individuality of your clients. However, examples sometimes help make things easier to understand. Anyone over the age of 18 should have a Health Care Proxy. Anyone one who is married should have a Health Care Proxy and Last Will and Testament. Anyone who owns a house or has a retirement account should have a Durable Power of Attorney. It is that simple. A single person or a widow or widower who have never had a trust will not need a credit shelter trust. They may or may not need a revocable trust or an irrevocable trust or both. This is what having an hour discussion is all about. But…. If you want to have complete unfettered control of what is held in trust, you do NOT want an irrevocable trust, you want a revocable trust. If you want to protect the assets of the trust from creditors or to qualify for MassHealth/Medicaid you do NOT want a revocable trust, you want an irrevocable trust. If you want to control some assets and protect other assets you might want one of each kind of trust. Both kinds of trusts will aid you in the management of the assets if you were disabled and to avoid the probate process if you have passed away. Again, be careful to not assume what I just described is for you. What you might hear in a seminar or a class, whether with me or another speaker is not designed to define what you need. It is a guide. It is essential that have a one on one with an estate planning attorney to create a plan that is distinctive for you. For more information on drawing up a Will, Durable Power of Attorney, Health Care Proxy, or Living Trust, contact your local attorney. For more information on The Law Offices of Dale J Tamburro, please visit our web site at www.tamburrolaw.com , email us at Dale@Tamburrolaw.com or call us directly at 617.489.5919.

Why Your Unique Family Requires a Customized Estate Plan

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IRS Announces 2025 Gift and Estate Tax Exemptions Annual Gift Tax Exclusion Effective January 1, 2025, you will be able to make individual gifts of up to $19,000 in the calendar year (an increase from $18,000 in 2024) tax-free. In other words, giving more than $19,000 to any individual in 2025 means you may have to file a gift tax return. For a married couple filing jointly in 2025, the annual gift tax exclusion will be double that: $38,000. Estate Tax Exemption Meanwhile, the IRS has announced that the federal estate tax exemption will jump to $13,990,000 per individual in 2025, up from $13,610,000 million in 2024. Again, married couples’ exemption will be twice that, at $27,980,000 million. Over the course of your lifetime, you would therefore be able to give away up to $13,990,000 (as of 2025) before you owed a federal gift tax. If the total worth of your estate falls below this amount, your estate will not owe federal estate taxes. (Note that state estate tax is a different matter, which varies depending on where you live.) The estates of most Americans fall far below the current gift and estate tax thresholds. However, for affluent taxpayers who pass away in 2026 or later, these thresholds are on track to decrease by about half. As a result, a greater number of estates will become taxable. Tax bills could be higher going forward, too. Note that the IRS will allow you to give away a total of $13,990,000 (as of 2025) during your lifetime before you owe a gift tax. The End of the Tax Cuts and Jobs Act (TCJA) Is Approaching At the end of 2025, the Tax Cuts and Jobs Act is slated to sunset unless Congress takes action. The sunsetting of the TCJA will have a significant impact on taxpayers. When the TCJA expires, the federal estate and gift tax exemptions will return to what they were in 2017 (around $5 million, with an adjustment for inflation). To avoid this, lawmakers would have to alter the exclusion limit prior to December 31, 2025.

Common Reasons to Downsize Your Home? Knowing it is time to downsize your home is a very personal subject! With the size of the average home in the U.S. bigger than ever, many owners are finding themselves in living spaces that are more expansive than they want or need. Whatever the reason for buying a bigger home, if you are now thinking of going smaller, you are not alone. As life goes on and your needs change, finding a less demanding home can be ideal. When you're considering downsizing to a smaller home, a condominium, over 55 community or an assisted living community, the questions below will help make the decision easier. Does downsizing your home make sense right now? Downsizing is a question only you can answer. 1. Have the kids moved out of the house? One of the top reasons why so many people go big with their house purchases is to fit a growing family. But when the kids go away to school or move out of the house to start their lives, it can leave many bedrooms sitting available – rooms that have to be cleaned, spaces that wind up being heated and cooled with no one in it. If you no longer need a four or five-bedroom home, it may be prudent to downsize to something smaller and cheaper. In fact, you may find that a significant amount of money is going out the door to pay for your kid’s college degree and the home has become a financial burden. Money is often a motivating factor for knowing it is time to downsize your house. 2. Do you want to keep costs down? Expenses are a major reason people downsize their homes. Big houses are expensive to maintain, to insure and costs more in property taxes. Big houses also lead to higher utility bills. With a smaller home, you will save money on your monthly and yearly costs. If you are close to retirement or you are already retired, these savings can make your retirement funds go much, much further. If your house repairs are being done with short term rather than long term goals it might be time to move on. 3. Are you worn out from taking care of your property? Large houses require a lot of upkeep, as do big yards. Keeping a big home clean and in good working order is a lot of work. Mowing an expansive lawn takes a lot of time, and cutting the grass only gets harder as you get up there in years. Raking up the leaves in the fall is tedious even when you are young and fit. Keeping up with the leaves when you 5/8 are older is tiresome. You may pay for landscaping and cleaning services to take care of all these things, or you may just be resolved to working for hours each week on keeping up your property. Either way, you may be wondering if there is an easier option. A small home takes less effort to keep up, and a townhouse or condo is even less work because the exterior work is handled by the management company. You should get a complete understanding of which housing choice makes the most sense a home or a condo. Have to look at the advantages as well as disadvantages of homes vs. condominiums. If you travel a lot of just don’t have the time necessary to keep up with a home, a condo may be the best move. If on the other hand, you can’t stand the thought of losing control what goes on around you, a home may be the wisest choice. When downsizing these are subjects that should be thought through thoroughly. 4. Do you need to be in a different area? Your life is changing all the time, which means your priorities and the demands of your day will change too. Sometimes downsizing is necessary to accomplish a primary goal. You may have grandchildren you want to be close to, or another family member or loved one that you either want or need to be nearby. You may have obligations to a group or organization that are hard to meet in your current location. Or you might want to be closer to things you know you are going to need in the future, like healthcare. Selling your current home and moving into something smaller is usually the best way to get close to the things that are important to you. Your willingness to go with a smaller property gives you options. 5. Is the design of your home no longer conducive to your present needs? One of biggest problems as you age can be mobility. If your home is designed for multiple floor living It may be time to move, even if the monetary change is marginal, having the one floor living, or elevators can be critical. 6. Do you have a lot of equity in your home? If your house is paid off, or if you have a considerable amount of equity in your property, you may be able to sell your home, buy a smaller house in a cheaper area, and still have a sizable amount of cash left over. Depending on where your home is located, the market and how much the home as appreciated in value, you may find that your house is now worth far more than you imagined. You can find a smaller, less expensive home and add a lot to your retirement – or use the money for whatever you need it for. Let’s face it not having the burden of a mortgage feels good as well! Do, however, make sure you are up to speed on capital gains tax laws for real estate. This is one of the best home ownership perks from a financial standpoint, given the fact you can exclude up to $250,000 in profit if single and $500,000 if married. As great as the tax code is, if you live in a large, expensive home with tons of equity, you could have a good size tax bill. 7. Do you want a change of scenery? A big, lovely home can start to feel like an anchor. Sure, the home is impressive, but even the most impressive home can start to drag you down if you are ready to move on to a different area. You may want to live next to the ocean, or in the mountains, in a city or out of one. Many times, people want something different, which is perfectly OK. Maybe hot desert air is calling to you, or you want to relax in a small, quiet town. Whatever location you are looking at, chances are if you sell your big home you will have the ability to settle there in a small, modest home. When folks get older in life, they may also find that instead of having one big home they would rather have two smaller properties. Sometimes people don’t want to leave the roots of their hometown, so they will and buy a smaller property in the same location. They will, however, also buy a second smaller place in an area they have vacationed in and simply love. Maybe downsizing sounds appealing to you for this exact reason. If you believe it is time or will be in the near future to downsize what other considerations should be forefront on your mind? SELLING AND WHERE TO GO/DOWNSIZING Like any person Selling there is basic but crucial information required prior to Selling. · How much is your home REALLY worth? · Are there any liens on the property? · Are there title issues that you are not aware of? · What are the tax ramifications of Selling? · Is hiring an experienced realtor, attorney, accountant, and financial advisor advisable? · What are you going to do with years of personal property and who can help you? · Once you have identified these items you have a better idea how much money you will have, how long it might take to be ready to sell and then you move forward to: Where do I go? · Moving in with the kids? A smaller home? A condominium? Assisted Living? Are you going to Rent? · Should I take a mortgage out? · How should I own the property? In a Trust? What kind? · do you need a formal living room in your next home? · Look through your current home and look at everything you can get rid of! · Sell items you know you will not be taking with you. A garage or yard sale is one of the best exercises when moving to a smaller home. Buying a Smaller Home pros and cons Renting pros and cons Assisted Living Pros and Cons Buy a Life Estate in your Child’s Home Build an addition and make improvements to your child’s house. Set up Personal Care Contracts to Pay your children to help care for you.  Can you live with them?

One of the many advantages of a living trust is its simplicity at tax time. Before 1981, a revocable living trust had to file its own tax return (Federal Form 1041) and apply for and use its own Taxpayer Identification Number (TIN). In 1981, however, the Internal Revenue Service issued new regulations that not only permit the creator (grantor) of a revocable living trust to use his or her own Social Security number and file Form 1040 only but also specifically encourage them to do so.

Estate planning is all about five essential documents. Here they are in order of importance...