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Is an Inheritance a Gift or an Entitlement?

26 Sep

MetroBoston publication date September 25, 2013
By Attorney George Warshaw

The answer depends not only on your personal philosophy but whether you are the one inheriting or giving.

More people these days are considering whether it is better to leave all or a sizeable portion of one’s money and property to a charity rather than one’s children.

A frequently asked question is whether an inheritance will help one’s children in some important way or provide an incentive to do little or nothing with their lives, personal growth, or career development.

Frankly, too many children of wealthy or financially well-off families seem to do far less with their lives while waiting for an inheritance and become hostile later on when they don’t believe they received enough.

In my view, the number one purpose of earning money and acquiring assets over a lifetime is to take care of oneself first and foremost. What you leave to your children afterwards is something you earned. That point should be emphasized to one’s children.

Many believe today that the best estate plans remove the cost burden of education and medical expenses for one’s children or grandchildren, provide support where needed and incentives to do more with their lives.

More next week.

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions.

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Marriage and Real Estate

5 Feb

MetroBoston Publication Date February 5, 2013
By Attorney George Warshaw

State law provides married couples a special form of home ownership protection. It’s referred to as a “tenancy by the entirety.” It’s like a joint tenancy but for married couples.

It’s created by simply stating in the deed, “I grant to Dick and Jane, husband and wife (or being a married couple), as tenants by the entirety, the following property . . . .”

What’s special about it?

Real estate acquired under the heading “tenants by the entirety” is similar to a joint tenancy in one sense: if one person dies the other inherits it automatically. A probate court is not required to pass title to the survivor.

Marital property held this way has two special features: first, a creditor of only one spouse cannot seize and sell the marital home so long as it is the principal residence of the other spouse; and second, neither spouse can eliminate the right of the other to inherit the property by merely giving a deed to a child or an outsider.  

There are several exceptions that may make a visit to a lawyer worthwhile. If you acquired your martial home before February 11, 1980 or were originally deeded your home as joint tenants or tenants in common, consult a real estate lawyer to upgrade your ownership. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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Owing Real Estate as Joint Tenants

31 Jan

MetroBoston Publication Date January 31, 2013
By Attorney George Warshaw

Two or more people can own real estate together in several ways. One of the most common is as “joint tenants with rights of survivorship.”

A joint tenancy is a form of ownership by which a person’s ownership rights in property pass to one’s co-owners upon death.

Ordinarily, when a person dies the heirs must go through the probate court to obtain certification of an inheritance of real estate. Property owned or held as “joint tenants” avoids probate because the property transfer is automatic upon death.

Simply file the death certificate with the Registry of Deeds and the transfer of legal ownership become complete and noted in the official records. Nothing more is necessary to effectuate the transfer of title ownership.

A joint tenancy in real property is established by the initial words of transfer used in the deed. “I grant to Fred and Wilma Flintstone the following property as joint tenants with the right of survivorship . . . .” is how it is typically phrased.

Can one joint tenant deed his or her interest without the consent of the others? Yes. One joint tenant always has the right to transfer his or her ownership interest without the permission of the other – but the automatic inheritance right is usually lost upon the transfer. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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Is it Better to Give than Receive?

17 Jan

MetroBoston Publication Date January 17, 2013
By Attorney George Warshaw

When families get together over the holidays talk often turns to inheriting mom or dad’s house or estate.

Is it better to receive a gift of real estate today or inherit it later? Tax wise, a gift isn’t always the best choice.

When a person dies one’s real estate has to be valued. Let’s say the present market value of the house is $500,000, but mom or dad only paid $100,000 for it.

Give it to your children while you are alive and they are considered to have acquired it at the same price you (mom and dad) paid plus any improvements.

A person who receives a gift steps into the shoes of the giver. If your children acquire the property by gift at the same price or tax basis as mom and dad paid ($100,000) and sell it later for $500,000, they’ve made a profit of $400,000.

If your children inherit it later, on the other hand, the tax law treats it as if your children bought it at its fair market value. Inherit it at $500,000, sell it at $500,000 and they technically made no profit.

Always consult your tax advisor or attorney before gifting real estate. It’s a complicated subject. The above information may not apply you. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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WHO SHOULD YOU TELL ABOUT YOUR WILL

1 Nov

MetroBoston Publication Date October 31, 2012
By Attorney George Warshaw

Other than your spouse and your lawyer, should you tell anyone else?

Think thrice before you do. It may go against your compelling desire to let others know about their inheritances, but I say this from experience: people often change their minds when it comes to money and property, especially later in life, and more especially if they remarry.

Create an expectation that doesn’t come true, and you may leave someone with badly injured feelings or ill thoughts of you.

The purpose of a will may be to leave money and property to someone, but there is another purpose, rarely considered, but as important in my view – avoiding family strife and discord that often follows a surprising inheritance or disinheritance after one’s death.

Take your children for example. Once you’re dead you won’t be able to fix hurt feelings if an inheritance doesn’t match your promise or their expectations.

And we’ve all heard the stories of families torn apart after an older parent remarries and promised inheritances go to someone else’s children. Use your will to promote family harmony and a positive memory of you.

So be careful what you disclose if you decide to tell all.  Contact me if you need help with your planning. ©2012 George Warshaw.

George Warshaw is a well-known attorney and legal author . He practices real estate and estate planning, assisting buyers and sellers of homes and condos and preparing wills and trusts. Send him your thoughts and comments at metro@warshawlaw.com.

 

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Minimizing Stress in Buying a New Home

18 Oct

MetroBoston Publication Date October 17, 2012
By Attorney George Warshaw

The real estate market has heated up. While prices are not what they once were, prices are moving upwards with many properties selling over the asking price.

With pent up buyer demand comes stress, especially if you are selling your home and buying a new one.

Avoid the two most common mistakes that buyers make.

First, if you are selling and buying a new home don’t try to do both on the same day. Sell on one day and buy the next. There is too much that can go wrong to risk it all on the same day.

Second, don’t choose the busiest day of the week to close on your purchase.


What would happen if the deed doesn’t get recorded that day? You might not be able to move into your new home for several days. If the sellers were counting on the money to buy a new place to live on the same day, what will they do?


All this can be avoided: never choose a Friday, the last day of any month or the day before a holiday for your closing. These are the busiest real estate days. Why take a chance?


Everything happens very quickly in real estate. Take your time – and a deep breath. © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

 

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Is Social Security a Better Investment than Real Estate?

16 Aug

MetroBoston, Publication Date August 15, 2012
By Attorney George Warshaw

The Associated Press reported a story that many missed: “Since 2010, Social Security has been paying out more in benefits than it collects in taxes.”

“The Social Security trustees project the [present $2.7 trillion dollar] surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction . . . . The projected shortfall in 2033 is $623 billion, according to the trustees’ latest report. It reaches $1 trillion in 2045”.

If Congress does nothing – which it has been inclined to do (after all, THEIR benefits aren’t affected) – they will have to raise your retirement age, cut your benefits, or raise your taxes. Likely, all three.

Is your condo or three-family house a better revenue source than Social Security? Well, you’ve likely refinanced it to the lowest possible interest rate imaginable.  It will be paid in 30 years.

Which do you think will be a better source of future retirement income: what you already own and can rent or social security?

I’m betting on rental income.

So, if there is any way you can keep or acquire future income generating property, it may be a better bet than social security.

More next week © 2012 George Warshaw

George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Do You Need A Lawyer to Buy A House?

18 Jun

MetroBoston, Publication Date June 18, 2012
By Attorney George Warshaw

If you are getting a mortgage the bank will hire an attorney to examine the title and conduct the closing. Do you really need to hire and pay for your own lawyer as well?

The role of the lender’s attorney is to implement the loan, not advise the buyer on legal matters or assist in the purchase and sale agreement.

If a title examination shows an easement giving someone the use of or the right to go across your property, as often occurs, the lender usually won’t care but the buyer might.

Or if an examination reveals a restriction on the color you can paint your house, the ability to add a deck, or a myriad of other common matters, the lender will likely not care.

Chances are you won’t even be told about any of a number of matters affecting the property. They’ll just be listed in a form that you might not even see at the closing.

Don’t count on the lender’s attorney to provide any advice if a problem arises. Their job is to collect the money, clear any liens, pay the seller, and get the lender’s papers signed.

So be a smart buyer: save the pennies on something else. Hire your own attorney and get personal legal advice.

©2012 George Warshaw

George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Medicaid – The 5 Year Lookback Rule

13 Apr

Metro®Boston, Publication Date: April 11, 2012
By Attorney George Warshaw

Last in a Medicaid series

I’ve never met anyone who would rather give his or her money to the government than leave it for one’s children, heirs or charity. The government never has as well.

To combat the natural inclination of giving away one’s money and property to qualify for free nursing home care, Medicaid, like in hockey, has a penalty box.

If you impermissibly give away your assets in Medicaid’s eyes, the whistle blows, you are disqualified from further play and placed in the penalty box.

The penalty? Medicaid takes the value of your gift and divides it by the average monthly cost of nursing home care. The result is the number of months you must sit in the penalty box before you can apply again.

There is a safe harbor though, as lawyers like to say, where you can permissibly make a gift and avoid the penalty box: make that gift more than 5 years before you apply for Medicaid and your gift is usually safe.

Your gift is then no longer a countable asset on the government’s list of assets that you must sell and spend before you can qualify for care.

Be careful! Always consult an Elder Care Attorney for your particular Medicaid situation. © George Warshaw 2012.

Read the Medicaid series at www.GeorgeintheMetro.com

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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Medicaid – What’s Yours Is Mine!

3 Apr

Metro®Boston, Publication Date: April 4, 2012
By Attorney George Warshaw

Third in a Medicaid series

To qualify for Medicaid a person has to meet a limited income test and a limited asset test. The threshold amounts differ for married and unmarried persons. This article focuses on your assets.

Take everything you and your spouse own, throw them into a single pot, and then remove a few approved items. The government then counts or adds up the value of what’s left over. If these countable assets add up to too much, you don’t qualify.

If you don’t qualify, you must sell and spend your “countable assets” in a permissible way.

Think of it as a two-column list. Column A is the government’s list of what you must first sell or spend before you qualify. Column B is your list of what you can keep. It’s your safe harbor.

Your home is usually protected. It’s in your column; but if you put your home into a revocable trust, it usually shifts to the government’s sell and spend Column. If you are unmarried and the equity in your home is $750,000 or more (you should be so lucky!), your home shifts to the government’s sell and spend Column.

Be careful! Always consult an Elder Care Attorney for your Medicaid situation. This article provides general information only, not legal advice.

Next week, Medicaid’s Penalty Box!

© George Warshaw 2012

George Warshaw is a real estate and estate planning attorney in Massachusetts.  He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Medicaid – Taming the 800 lb. Gorilla

29 Mar

Metro®Boston, Publication Date: March 28,  2012
By Attorney George Warshaw

Second in a Medicaid series

It is a Gorilla, though not necessarily as nice. It’s filled with rules, exceptions to rules, exceptions to exceptions and a time consuming and discouraging process.

I needed to learn how one protected or lost one’s home or inheritance. I spent weeks reading the MassHealth regulations, researching Medicaid online and reading more on the subject. I found a way to organize this mess of information to make sense of it – for you and me.

There are four key rules: rules that qualify you for Medicaid; rules that disqualify or penalize you; rules that protect you from the Gorilla; and rules that drain your children’s inheritance.

And for each rule, there is always one more question: is the Medicaid applicant married or unmarried, because the rules often differ if an applicant is married.

For example, there are circumstances where an unmarried Medicaid applicant can be forced to sell his home to pay for nursing home care before qualifying for Medicaid or retaining it; but if he is married, and his wife still resides in the house, the home is usually fully protected from a Medicaid required sale.

More next week!

Warning: only a personal consultation with an Elder Care Attorney can provide proper legal advice for your situation. This article provides general information only.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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MEDICAID AND YOUR HOME

22 Mar

Metro®Boston, Publication Date: March 21,  2012
By Attorney George Warshaw

In the last few weeks we used the plight of 98 yr. old Mrs. K, who found herself being evicted by her son from the home she once owned, to review how a parent can protect oneself when transferring a home to one’s children. See www.GeorgeintheMetro.com.

The risks in any such gift or transfer are apparent: what happens to a parent’s home if the child who is supposed to protect the parent gets divorced, sued or becomes bankrupt, or mortgages the house without the parent’s knowledge – or sells the house?

It happens despite the best of intentions. That’s why trusts are good. They can protect a parent through customized content.

But what often what works for one purpose doesn’t work for another. That’s true at times with Medicaid. Medicaid doesn’t like trusts. And trusts don’t like Medicaid.

The premise of Medicaid is simple: with certain exceptions, the government believes that a person should exhaust nearly all his or her personal assets before the government should pay a dime for nursing home care and Medicaid benefits. The government is the 800 lb. gorilla life looming over your life.

The Medicaid regulations are intricate, complex and not well understood. I’m going to explore several rules that affect one’s home in next few columns. Stay tuned. © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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Is Fluffy Named In Your Will?

15 Feb

Metro®Boston, Publication Date: February 15, 2012
By: George Warshaw

How many of you remembered to mention your best friend in your will or trust? Yes, I mean your cat, dog or horse.

Hardly anyone I suspect!!!

Recently I was at a “dog-in-park” charity event speaking on how to protect your pets should you become ill or die. I asked numbers of people if their pets were mentioned in their will.

Half didn’t have a will (shame on you!); and of the remaining so-called “dog lovers”, one person had a special trust for her pet, but only one out of ten mentioned their pets in a will or trust.

If you think your kids, your friends or someone you know will certainly take care of your pets, don’t be fooled! You’ll be shocked and appalled at the multiple thousands of pets needlessly abandoned each year upon the death or illness of their owner – and it could easily happen to you!

What to do in your will or trust.

First, pick several choices for your pet’s potential caretakers.

Second, set aside some money for your pet’s medical care, food and well-being.

Third, talk to a lawyer to make sure that the money you set aside will actually be used for your pet’s care.

Don’t delay! © 2012 George Warshaw.

George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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Do You Need A Children’s Trust?

7 Feb

Metro®Boston, Publication Date: February 8, 2012
By: George Warshaw

Is there anything more important than your children’s upbringing?  What would they do if you died?

Many people add a few scant words in their wills to provide for their children; others create a so-called subtrust as part of a 60-90 page master estate planning trust that requires a flow chart and diagrams to figure out.

Let me give you another idea.

Why not create a separate trust document devoted solely to your children, written in plain English, that they and you can read and understand. Call it a “Children’s Trust”.  Your will, life insurance or master estate planning trust funds the trust and all or part of your children’s upbringing.

You can fund their education, provide for medical care and reward personal accomplishments. You can provide incentives that broaden their personal growth and experiences. Here’s an example:

Let’s say you want your child to experience first-hand the heartbreak of a Katrina-like disaster and helping people in need. In your Children’s Trust, you offer to pay your child a handsome salary for spending a summer working for Habitat for Humanity or the like.

So consider what’s important to you and perhaps your child will “ace” your final exam!

Next week:  Protecting your Pets.

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© 2012 George Warshaw.  George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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Providing for Children and Pets in a Will

31 Jan

Metro®Boston, Publication Date: February 1, 2012
By: George Warshaw

Last week I wrote about the basics in preparing a Will.

Now, what about providing for your children and pets?

Pets are simpler to plan. Most people, however, in preparing a Will overlook them completely. That’s not the way to reward your devoted companion!

At a minimum, it’s important to list several choices as your pet’s future caretaker, since your first choice may not be available then or in the future. And don’t forget to provide some money for your pet’s future care.

Children are more complicated. There are three issues: guardianship, funding and planning their future.

Who will raise your children – and who are your first and second choices as substitute parents (i.e. guardians)?

Secondly, where will the money come from to help raise them, and do you want to provide economic incentives to encourage their personal growth and development?

This is part of your core planning.

I’m a believer in creating separate trusts for children and pets that provide for their future needs. A stand-alone children’s trust is a great planning opportunity that can better assure their education and future.

Next week, more on trusts for children and how you can accomplish specific goals. © 2012 George Warshaw.

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George Warshaw is a real estate and estate planning attorney in Massachusetts. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts for individuals and families. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Important Changes to Probate Law May Affect Your Will

20 Jan

Metro®Boston, Publication Date: January 18, 2012
By Attorney George Warshaw

Charles Dickens is now safely buried.

Remnants of ancient England that ruled our probate procedures in Massachusetts will be gone in a few months. Beginning this April, the Massachusetts version of the Uniform Probate Code will become the law.

And with it, a new informal procedure will allow one’s heirs to probate a simple estate in a speedy process.

Under the new law, a person filing a will now has a choice: utilize a formal process in which a judge oversees the probate or elect an informal process that lets court clerks, designated as Magistrates, approve the will or a petition where there is no will.

While certain types of estates must go before a judge, most are straight-forward, uncontested and are perfect for the new informal process.

The new law also changed many of the rules regarding wills and inheritance.

For example, the rule in Massachusetts that marriage revoked a will made prior to the ceremony unless the will directed otherwise has been changed, among other important revisions.

So don’t take chances. It makes good sense to review and update your will before the new law goes into effect.

And if you don’t have a will, well you can guess my advice!

© 2012 George Warshaw
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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Where is Grandma’s Will?

11 Jan

Metro®Boston, Publication Date: January 4, 2012
By Attorney George Warshaw

Over family gatherings during the holidays, the topic often turns to one’s parent’s or grandparent’s will.

“It’s in the safe deposit  box, I think.”

“It’s in her sock drawer with her old letters from Dad.”

“It’s not where I saw it last. OMG! Maybe the lawyer has it?”

While a safe deposit box seems like a good idea to put the will, if your name isn’t on the box you will need authority from a court to open the box.

There’s another place you can store a will that is cheap and easy.

Try the Registry of Probate. The fee varies with the county but it’s not a lot.

In our office, we hold the original will for 12 months in case someone wants to make any changes or updates. We then file the will with the Probate Court.

Since most changes or corrections are made in the first year, it’s not likely to change for several years and the will can be easily retrieved for updating.

If the person later dies, the Probate Court checks its storage records when an estate is later filed.

So if you want to find it when you need it, consider using the Probate Court instead of a safe deposit box or Grandma’s sock drawer!

© 2011 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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