The DJT Blog

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. Other Options : What if you decide that downsizing your home is not the best move at present, but you need additional funds. Are there any options to get funds while remaining in my home and possibly downsizing later? There sure are! Look at the practical ways to get the equity out of your house. If you are 62 or older, a reverse mortgage is one of the best ways to remain in your house while also having access to your home’s equity. Tips For Downsizing Your Home Once you conclude that a smaller home is in your best interests, you’re going to need some of the best tips for downsizing your home! Here are some pointers for your consideration: Access your current needs – for example, 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! Do you have a hoarders’ mentality? This is something you need to change when downsizing. Think carefully about the design of what you want in your new smaller home.  Measure your current furniture and see what will fit and what won’t in your new place. If you have oversized furniture, consider getting rid of it. 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. Figure out the storage area in your new home. Sometimes people overestimate going from a large to a smaller home in the area they will have. Understand the best ways to pack a home for a less stressful move.

FOR SINGLE OR MARRIED PEOPLE WITHOUT CHILDREN · Basic Understanding of Finances, Paying Bills, rearranging debt, attention to credit, start saving money, school loans · How to buy your first home; How to come up with the down payment · Under about 401K/IRA vs Roths; start small but start · When to buy life insurance and what kind · Explain the need for a Health Care Proxy and HIPAA authorization; Discount need of a Will unless married · How is the couple sharing financial responsibilities; individual accounts and joint accounts; buying a home with a non-50/50 contribution · Understand Home Care, Home/Car insurance; Homestead; How to take Title (default of Tenants in Common) FOR MARRIED COUPLES STARTING OR ALREADY STARTED A FAMILY  · You need a Will because of the Guardianship Clause; Guardian of the Person vs Guardian of the Property. Perhaps time for your first Power of Attorney but definitely Will and Health Care Proxy · Life Insurance for Peace of Mind (enough money to get the kids through to adulthood); How much insurance; Term or Whole Life or Both · The Values of a Standby Trust for your children or a combination of your spouse and children · Financial Buckets; short term; long term longer term · Tax Planning; Investments beyond IRAs; should you diversion between pre-tax money and post-tax investments; Balance; Time for a financial advisors that emphasizes investment and growth in contrast to life insurance and such products · Pay attention to your parents; their estate planning; what are your expectations · 529 Plans or similar programs · What happens to your estate plan when you have more children? · Maintain your Estate Plan by periodic reviews with estate planner; If nothing changes, 5 years and as you get over shorter periods; · Review your Estate Plan when changes occur: o More children o Parent’s Disability or Death o Selling and Buying a new home or investment property; o Significant increase in Income or Net Worth o Eventually College planning for children o Look at your Fiduciaries; are they still appropriate · Is there a compelling need to coordinate Your Planning with Planning of your Parents or others who you anticipate will be leaving you something upon death. · Special Need Issues if you have a handicapped child · You may be needed to be a fiduciary for the Parents; What are your responsibilities, liabilities and personal ethics involved and family harmony · If your net worth goes up significantly, should you be looking at forming a trust or amending one you already have; do your wishes for your children change as they grow into their teens and are different; do you want to restrict your children’s access to funds until they are older? Divide it so they receive some at different ages; Who do you want as Trustee if you aren’t available? Are the people named in your will as Guardians still appropriate.

In recent years, a number of non-lawyers have started offering Medicaid (Longterm MassHealth in Massachusetts) planning services to seniors. While using one of these services may be cheaper than hiring a lawyer, the overall costs may be far greater. The person offering such services may not have any legal knowledge or training. Bad advice can lead seniors to purchase products or take actions that won't help them qualify for Medicaid and may actually make it more difficult. The consequences of taking bad advice can include the denial of benefits, a Medicaid penalty period, or tax liability. Additionally, our experience, having provided services in this area for over 30 years, has shown these non-lawyers have consistently failed: To diligently and comprehensively identify all the assets of an applicant before applying. Do not explain adequately, movement of the applicants’ funds over the five year lookback, which is necessary for the applicant to be accepted by Medicaid (MassHealth). Most do not offer planning advice. In contrast as an attorney, my priority will be to determine what money can be saved, used within the rules and how especially to handle real estate that the applicant has an ownership interest in. Such advice could preserve their home for their spouse and other beneficiaries and save the applicant or their family thousands of dollars, far exceeding the cost of such planning or services for the application that an attorney would charge. If they do provide advice, it could be bad advice, costing the applicant to lose an eligibility date or eligibility all together. A loss of even one month of eligibility could cost the applicant or their family as much as $20,000. As a result of problems that have arisen from non-lawyers offering Medicaid planning services, a few states (Florida, Ohio, New Jersey, and Tennessee) have issued regulations or guidelines providing that Medicaid planning by non-lawyers will be considered the unauthorized practice of law. For example, in Florida, a non-lawyer may not render legal advice regarding qualifying for Medicaid benefits, draft a personal service contract, or determine the need for or execute a trust.  Applying for MassHealth is a highly technical and complex process. It is especially difficult for long term care benefits like coverage for nursing homes. A lawyer knowledgeable about Medicaid law in the applicant’s state can help applicants navigate this process. An attorney may be able to help your family find significant financial savings or better care for you or your loved one. This may involve the use of trusts, transfers of assets, purchase of annuities or increased income and resource allowances for the healthy spouse. In Massachusetts particularly, the application process, although conceptually straightforward, is not. Too often a comprehensive application submitted still ends up on an appeal to the Board of Hearings, which is handled by attorneys for the Commonwealth.

When I give Seminars on Trusts, they are long, detailed and I think very helpful to people who want to learn about Trusts. But I almost never cover enough information on your different choices for Trustees and the responsibilities of the Trustee. Like any estate documents they are only as good as the fiduciaries named in them. For a trust the fiduciary is called a Trustee. Trust Administration Basics A trust is established through the creation of a trust agreement. Within the trust agreement, the Donor or Grantor (creator) of the trust must appoint a Trustee. A Trustee can be any qualified adult, including a friend, family member, or professional (such as an attorney). The Donor can also appoint more than one Trustee, making them Co-Trustees or appoint an entity, such as a bank, to be the Trustee. The Trustee’s overall job is to guard the trust assets and oversee the administration of the trust. Administration the trust, however, involves numerous duties and responsibilities, including: The Donor or Grantor of the trust creates the trust terms, and those terms dictate how the trust should be administered. The Trustee needs to have a clear understanding of those terms and is legally required to follow them without deviation unless a term is illegal, impossible, or unconscionable. The Trustee is required to understand the trust purpose, as outlined in the trust agreement, and to make decisions with that in mind. A Trustee cannot allow his/her personal opinion to get in the way while administering a trust. One of the most important aspects of a Trustee’s job is protecting the trust assets. The Trustee is also responsible for investing the trust assets to help the principal grow. Unless the Donor specifically directs the Trustee to make riskier investments, all investments should be low risk and protecting the trust principal should take precedence over growing the trust assets. The Trustee has a duty to keep trust beneficiaries apprised of trust business and to communicate with beneficiaries as necessary. The terms of the trust agreement will dictate how the distribution of trust assets should be handled. The Trustee, however, is responsible for making sure those terms are followed and that the beneficiary receives the distribution according to the terms of the trust agreement. The trust agreement may give the Trustee the authority to make discretionary distributions. If a beneficiary needs funds prior to a scheduled distribution, for example, the Trustee may have the authority to grant that request. A Trustee should keep detailed records of all trust business, including distributions, payment of trust bills, and time spent administering the trust because those records may be needed to defend the trust, justify trust expenses, or even prevent the Trustee from being held personally liable for mistakes made during the administration of the trust. Because a trust is a separate legal entity it may be subject to taxation. Whether the trust must file a tax return and/or pay taxes will depend on the type of trust, the value of trust assets, and other variables; however, the Trustee of the trust is responsible for determining if any taxes are due and who or what should be paying them. If the trust has an EIN then the Trustee must also file the appropriate tax returns and pay or redirect any taxes due. The Trustee must provide an accounting annually to all qualified beneficiaries. Factors to Consider When You Choose Your Massachusetts Trustee A Trustee is in a fiduciary position, meaning that the utmost care must be taken to protect the trust assets and that all decisions must be made with the best interests of the beneficiaries in mind. A Trustee is also required to juggle a considerable number of duties and responsibilities while administering the trust. All of this should be taken into consideration when appointing a Trustee to limit the likelihood of costly mistakes being made by the Trustee. Before appointing a friend or family member based solely on your relationship with that person, consider whether that person has the following essential characteristics: The Trustee you appoint will be responsible for managing and investing the trust assets. Ideally, your Trustee should have a background or education in finance. By the same token your Trustee must understand the trust terms and the state and federal laws that are applicable to the administration of the trust. That makes someone with a legal background an ideal candidate for the position. Your decision should not be based entirely on the fact that you trust someone; however, being trustworthy is certainly a necessary characteristic for a Trustee given that the Trustee will control the money and assets you use to fund the trust. The Trustee is also responsible for distributing those assets to beneficiaries and paying trust bills, including his/her own fee for acting as the Trustee. Your Trustee may not agree with the terms of the trust agreement, but that cannot interfere with his/her job as Trustee. A Trustee is legally required to administer the trust and make discretionary decisions with the stated trust purpose in mind and by using the trust terms created by the Donor without regard to the Trustee’s personal opinion. Consider whether your prospective Trustee will likely create a conflict. If he/she is a member of the family, for instance, will appointing that person as your Trustee create a conflict within the family? Are other family members beneficiaries of the trust, putting the Trustee in a potentially awkward position? What about business dealings that could create a conflict for the Trustee? Whenever possible, avoid appointing a Trustee who will likely create a conflict. People frequently make the mistake of assuming that someone is willing to serve as the Trustee of the trust they create. With that in mind, be sure to discuss the position with a prospective Trustee before appointing him/her to the position. Along with making sure that a prospective Trustee is willing to serve, take into consideration whether the person will realistically be available to fulfill the duties and responsibilities involved in administering the trust. Consider where the person lives or is likely to live in the future as well as his/her existing family obligations. Finally, consider the person’s age and health when deciding if they would make an ideal candidate for Trustee . There are many considerations to think about if you have co-trustees. Often co-trustees are a family member/friend and a professional like an attorney or accountant. There are many good reasons to use a professional trustee with or without a co-trustee. These considerations are different for everyone and should be discussed at the time of creating the trust.

May is National Elder Law Month—a time to focus on legal protections for seniors. Learn how we support older adults with estate planning, long-term care, and more. Contact The Law Office of Dale J. Tamburro today to schedule a consultation and protect your loved ones’ future.

Protect your legacy with smart estate planning for your vacation home. Ensure smooth transfer, reduce taxes, and avoid disputes. Contact The Law Office of Dale J. Tamburro today to safeguard your property and provide peace of mind for future generations.

Choosing the right trustee is essential for protecting your legacy and ensuring your wishes are carried out. Learn what to consider when selecting a trustee. Visit The Law Office of Dale J. Tamburro for trusted legal guidance and make informed decisions today.

Learn how Credit Shelter Trusts can help Massachusetts residents reduce estate taxes and protect family assets. Get trusted legal guidance tailored to your needs. Contact The Law Office of Dale J. Tamburro today to plan your estate with confidence.

Learn which legal planning documents are essential for a solid estate plan. Get clarity on wills, trusts, powers of attorney, and more. Contact The Law Office of Dale J. Tamburro today to ensure your estate is protected with the right legal guidance.