As the season of giving approaches, many people reflect on how they can make a lasting impact on the causes that matter most to them. For some, this includes leaving a gift to their church or a cherished organization as part of their estate planning. Thoughtful planning allows you to extend the spirit of generosity beyond your lifetime and ensure your legacy supports the values and missions close to your heart. However, crafting a plan to leave money or property to an organization requires careful consideration to avoid potential pitfalls. So let’s discuss how to properly plan to leave a legacy to your church (or any charitable organization).

Clearly Define Your Intentions

When leaving a gift to your church or organization, be specific. State the exact amount of money or the specific property you wish to leave, and identify the beneficiary with complete clarity. Use the organization’s legal name, address, and tax identification number to avoid confusion or legal disputes. If the gift has a designated purpose, such as funding a specific ministry or project, spell that out in detail.

Specifically State Your Intended Gift In Writing

A verbal promise, no matter how heartfelt, does not hold legal weight when it comes to estate planning. Ensure your intentions are documented in a properly executed will or trust. Oral statements can lead to misunderstandings, and the organization may not receive your gift as intended.

Notify The Organization Of Your Intentional Gift

Surprising an organization with a gift after your passing may lead to complications, especially if the gift has conditions or requires maintenance (such as a real property). Inform the organization about your plans in advance to confirm their ability to accept and manage your gift responsibly.

Consider Using A Trust For Larger Gifts

For substantial gifts, a trust can provide more control and flexibility. For instance, you might set up a charitable trust to provide ongoing financial support or restrict the use of the funds to specific purposes. This ensures your legacy continues to support your chosen cause over time.

Don’t Overlook Contingencies

Circumstances can change. Organizations may merge, dissolve, or shift their mission. Include a contingency plan in your estate plan to specify how your gift should be handled if the intended beneficiary is no longer in existence or capable of receiving it.

Be Sure To Review and Update Your Estate Plan Regularly

Life events, changes in your relationship with the organization, or shifts in your financial situation may require updates to your estate plan. Regularly reviewing your will ensures it reflects your current intentions and priorities.

Consider Family Dynamics

While your intentions to support a church or organization may be noble, leaving substantial gifts to charity while neglecting family members can cause tension or legal challenges. Consider balancing your charitable giving with family needs to avoid potential disputes or hurt feelings.

Consult With A Knowledgeable Estate Planning Attorney

Working with an estate planning attorney is essential to ensure your gift complies with state laws and is structured in a way that benefits both you and the organization. An attorney can help you navigate potential tax implications and draft language that minimizes ambiguity or disputes.

Leaving money or property to your church or a charitable organization is a powerful way to extend the season of giving into the future. By taking the time to plan carefully, you can ensure your generosity creates a meaningful and lasting legacy that aligns with your values and supports the causes you hold dear.

When creating an estate plan, many clients ask whether transferring their property to their children while they’re still alive is a smart decision. The answer is “it depends.” Making this transfer can have lasting impacts—both positive and negative—on family dynamics, finances, and estate planning. So, without further ado, let’s dive into the pros and cons of transferring ownership of your home to your kids during your lifetime.

Why Would Someone Transfer Their House to Their Children While Still Living?

Transferring ownership of a home to children before death can be motivated by various factors, including estate tax and probate avoidance, Medicaid and long term care planning and ensuring the property ends up in the right hands. While these reasons may sound appealing, it’s important to consider both the pros and cons of such a transfer.

The Pros Include:

• Probate Avoidance.  Transferring a house can help avoid probate, which can be a lengthy, costly, and public process. By transferring the home in advance, you may save your family time and money, making it easier for them to access the property without legal hurdles.
• Potential Reduction in Estate Taxes.  By reducing the overall value of your estate (if it exceeds the current estate tax exemption), transferring your home may minimize estate taxes owed upon your death.
• Medicaid Planning / Long Term Care Planning.  If you expect to need Medicaid for long-term care in the future, transferring your home can help shield it from Medicaid’s asset requirements. However, due to Medicaid’s “look-back” period, early planning (currently five years in advance) making this transfer and result in Medicaid disqualification.
• Family & Legacy Reasons. Transferring your home while you’re still around can help ensure that the property stays in the family, especially if it’s a home full of sentimental value. By transferring ownership directly, you may gain peace of mind knowing that the family home will be kept within the family.

The Cons Include:

• Loss of Control Over the Property. Once you transfer your home, you are no longer the legal owner, meaning you lose control over decisions related to the property. Your children have the legal right to sell, mortgage, or lease the home unless other legal stipulations (like a life estate) are added.
• Potential Gift Tax Implications. When you transfer a home to your children, it is considered a gift. The IRS has a yearly gift tax exemption limit (presently $18,000 per year, per person), and if the value of the property exceeds this limit, you may have to pay gift tax. Consulting a tax advisor can help clarify the costs based on your specific circumstances.
• Capital Gains Tax Considerations. If your children decide to sell the home after receiving it, they may face capital gains taxes based on the original purchase price (or “basis”). By contrast, if they inherit the home after your death, they receive a “stepped-up” basis, reducing the capital gains tax owed.
• Medicaid Look-Back Period and Eligibility Risks. Medicaid has a “look-back” period, generally five years, which reviews past asset transfers to determine eligibility. If you transfer your home too close to the time you need Medicaid, you could be penalized and temporarily disqualified from coverage.
• Family Tensions and Responsibility Transfer.  If you transfer your home to multiple children, it may create conflicts over how to manage or use the property. Ownership responsibilities like maintenance, taxes, and repairs would also fall to your children, which could be a burden if they lack the resources to manage these costs.

Alternative Options to Consider When Transferring Your Home

If transferring your home to your children during your lifetime doesn’t seem like the right fit, consider these alternatives:

• Life Estate. This allows you to transfer the home but retain the right to live in it for the rest of your life. This can help avoid probate while giving you control over the property.
• Living Trust. Placing the home in a living trust can provide flexibility, avoid probate, and potentially reduce tax liabilities. A revocable living trust allows you to retain control, while an irrevocable trust may provide more robust tax and Medicaid benefits.

Work With An Experienced Estate Planning Attorney

Transferring your house to your children while you’re alive can provide financial, legal, and emotional benefits, but it’s not a one-size-fits-all decision. The decision ultimately hinges on your family’s unique needs, the tax and financial implications, and your long-term care plans. Consulting with an experienced estate planning attorney in Rhode Island can help you weigh the pros and cons and determine the most strategic path forward for your family and legacy.

Nursing homes are really expensive and it is no wonder people are terrified about how to pay for long term care. The fear is not misplaced. The average nursing home will cost you about $10,000 per month. The average nursing home stay is 18 months. For the majority of Americans, this will quickly drain your life savings. But can this catastrophe be averted? The answer is yes – with proper planning, you can prepare an estate plan designed to protect your assets from nursing home costs.

Because long term care is so expensive, the majority of Americans rely on Medicaid to pay for care costs.

What Is Medicaid And How Does It Work?

Medicaid is a partnership between the state and federal governments to provide medical benefit assistance to people, including those over age 65, who have financial need.

In order to be considered to have financial need, when you go into a nursing home and go on Medicaid, you cannot have more than $4,000 (in Rhode Island) in “available” resources.

Available Resources

Some resources don’t count, such as your primary home and the car used for your regular transportation.  Other assets such as vacation homes, rental properties, business assets and other investments will be counted toward your resources.

The Lookback Period

Assets that cannot be used for your benefit, such as those in an irrevocable living trust, don’t count either. However, In order to be fully protected your assets must be transferred into the MPT at least 60 months (5 years) before you apply for Medicaid. Transferring assets within the lookback period are subject to a “clawback” which means you will have to spend the equivalent amount of the value of the transferred asset before Medicaid will kick in. This is known as the penalty period and something you will want to avoid.

Not all living trusts are the same

There are two kinds of trust – the revocable trust and the irrevocable trust. . In this article, I will discuss only the irrevocable type, because that is what you will need to protect your assets from long term care costs. This Irrevocable Living Trust, sometimes referred to as a Medicaid Protection Trust, is a complicated legal instrument designed to protect your hard earned wealth from being depleted for your care. But this is not just any old irrevocable trust. The language used is very specific, and very restrictive, in order to shield the assets.

How The MPT Protects your Assets

The purpose of the Medicaid Protection Trust is to remove the assets from your control, so they are no longer available to you, under any circumstances, to pay for your long term care. Unlike a revocable living trust, where you can make changes to your trust and withdraw assets at your discretion, once you place assets in the Medicaid Protection Trust they must stay there.

So you may ask, why can’t I just give my assets to my children or grandchildren and qualify for Medicaid? The reason is this: giving away assets in order to avoid paying creditors (including medical care and nursing homes) is considered a fraudulent transfer. But not all gifts or transfers are fraudulent. If the gift or transfer was made well in advance, it will be ignored.

The Dreaded Medicaid Lien

“I don’t want the state to take my house when I die.”

This is one of the top five concerns our estate planning clients bring to us. It seems really unfair–a lifetime of work and savings to pay off a home you intend to leave to your family, only to lose it in the end. But that is how the Medicaid Lien works.  If you require long term care in a nursing home, after you pass away the state will attach your estate assets and expect to be paid back for the money spent on your care. This often means that your home must be sold and the proceeds handed over to the state, not your children or grandchildren. Not only your home but all other assets in your estate are subject to the lien. Because care is so expensive, it is not unusual for the lien to exceed the total value of the estate. Sounds unfair, right? That may be, but it is the current state of the law.

Protecting Your Assets From The Nursing Home Is Possible, And An Experienced Estate Planning Attorney Can Help

If you’re concerned about protecting your assets from nursing home costs, the time to act is now. At Jill Santiago Law Offices, we specialize in crafting personalized estate plans, including Medicaid Protection Trusts, to safeguard your hard-earned assets. Don’t leave your financial future to chance—proper planning can make all the difference for you and your loved ones. Click the link below to schedule a consultation, and let us help you navigate the complexities of estate planning with confidence.

Estate planning may not seem like a Halloween horror story, but ignoring the essentials can haunt you later. Working effectively with your attorney is key to keeping the skeletons out of your financial closet and protecting your loved ones. Here are some frightening mistakes you should avoid when working with your estate planning attorney:

1. Ghosting Your Attorney (Failing to Keep Appointments)

Disappearing into the night and skipping appointments is like inviting a curse on your estate plan. These meetings ensure your attorney can exorcise any potential problems and keep your plan up-to-date. Vanishing without notice gives the impression that your estate plan isn’t a priority, and that’s a terrifying prospect. If you must reschedule, don’t ghost us—reach out and we’ll find another time before things get too spooky!

A True Ghost Story:

Not too long ago, a potential client scheduled a consultation for some rather urgent planning. Despite sending appointment reminders, the individual blew off the appointment. They called the office a few months later, in a crisis. Needless to say, I could do nothing to help!

2. Burying the Truth (Withholding Important Information)

Keeping secrets may seem like a good plot twist in a horror film, but it’s a disaster when it comes to your estate plan. Hiding crucial details like debts, business interests, or family conflicts could lead to a plan that’s dead on arrival. If your attorney asks for it, it’s not witchcraft—it’s important. Let us see everything lurking in the shadows so we can craft a plan that truly works for you.

A True Ghost Story:

Speaking of withholding information, I once had a client tell me she was married as we were signing the documents. After explaining the entitlements that surviving spouses have in the estate, we had to rewrite the plan to avoid the surviving spouse challenging the plan in court. This would defeat the whole purpose of creating an estate plan! In the end, it just creates more work for us, and costs the client more money.

3. Procrastination Is a Monster (Delaying Decisions)

Procrastinating on important decisions like choosing beneficiaries or trustees is like inviting a zombie apocalypse—you may be too late to escape the mess. Delaying your estate plan leaves vital matters unresolved if an emergency strikes. Your plan can always be revised later, but it’s better to have one in place before the clock strikes midnight. Don’t let procrastination turn your future into a nightmare.

4. Ignoring Your Attorney’s Wisdom (Or Becoming a Know-it-All Werewolf)

Your estate planning attorney is your guide through the legal labyrinth, not a full moon villain. Ignoring or constantly challenging their advice can turn your carefully crafted plan into a horror show. Estate laws can be trickier than a haunted house, so trust the expertise of your attorney before you’re trapped in a legal fog.

The internet is full of information (and misinformation). Loading up on it may actually damage the relationship you have with your attorney.  You hire an estate planning attorney to give you expert advice, so challenging their expertise with your Google search results is a sure way to make the attorney (me) say I don’t want to work with you and move on.

A True Ghost Story:

I once had a potential client push back about “all the boilerplate language in the trust” as if the language was not important enough to be included in their plan. Rather than arguing, I simply stated that our firm was not a good fit and advised them to move on!

5. Letting Your Plan Rot (Failing to Follow Up)

Once your estate plan is created, you might think the scary part is over—but it’s only the beginning. Failing to review and update your plan as life changes (births, marriages, or financial shifts) can leave your plan as outdated as a mummy’s curse. Keeping your estate plan current helps you avoid unintended consequences that could creep up when you least expect it.

Get Your Estate Plan Set Up The Right Way

This Halloween, avoid these chilling mistakes by working closely with an experienced estate planning attorney. Collaborate, communicate, and stay proactive—so your estate plan doesn’t become a ghost story! Click the link below to schedule now.

Do you need a will, or do you need a trust? Confused about the difference? The major difference is probate – which is the court process that applies to a person’s estate whether they leave a will or not. When it comes to estate planning, understanding the difference between probate and trust administration can significantly impact your loved ones and the future of your assets. Poor planning can lead to lengthy legal processes, unnecessary expenses, and stress for those you leave behind. Here, we compare side-by-side the outcomes of planning with a will vs a trust.

Of course, this is not an exhaustive list of all the differences between planning with and without trusts, but a basic overview of the consequences of your estate planning, or lack thereof! Whether you need to include a trust in your estate plan depends upon your circumstances and your goals. You should talk to an experienced estate planning attorney to assess your situation and create a plan that works for you.  Book a call with Jill M Santiago by clicking the link below!

Imagine a living trust as a well-directed play, with each person involved acting a crucial role to ensure everything runs smoothly. As an estate planning attorney, I often find that explaining these roles as “actors” in a play helps clients understand their responsibilities and importance. Let’s meet the main actors in your living trust production.

The Trust Grantor: The Playwright (You!)

When you create a living trust, you are the “grantor” (also known as the settlor or trustor). Think of this role as if you are the playwright of your trust play. As the creator, the grantor writes the script by establishing the trust and laying out its terms. They decide how their assets will be managed and distributed, setting the stage for the entire production. The grantor’s primary role is to fund the trust by transferring their assets into it, giving the trustee something to manage and the beneficiaries something to receive.

You don’t have to be Shakespeare to create your own living trust, you just need to pick your cast and crew–and an experienced estate planning attorney that will help you through the process.

The Trustee: The Director (Also You)

The trustee is the director of the play, responsible for managing the trust’s assets according to the grantor’s script. This role involves a lot of behind-the-scenes work, including investing assets, paying bills, and ensuring the beneficiaries receive what the grantor intended. The trustee must follow the grantor’s instructions closely and act in the best interests of the beneficiaries, making decisions that keep the play running smoothly. Most often, you will be the initial trustee of your trust.

Successor Trustee: The Stand-In Director (Someone You Chose)

If the original trustee can no longer fulfill their role due to incapacity or death, the successor trustee steps in as the stand-in director. They take over all responsibilities of the original trustee, ensuring continuity in the trust’s management and the seamless execution of the grantor’s wishes.

The Beneficiaries: The Audience (Private Showing)

The beneficiaries are the audience of your trust play. Beneficiaries are the ones who ultimately benefit from the trust’s assets. The grantor sets up the trust with the beneficiaries in mind, directing how and when they will receive distributions. While the audience enjoys the performance, the trustee (director) works behind the scenes to make sure everything goes according to the script.

Legally speaking, you are a beneficiary of your own living trust (until you die).

Supporting Cast Members: Legal and Financial Advisors

Just like a play might have advisors and consultants to help with production, a trust might involve legal and financial advisors. These professionals assist the trustee with complex decisions, ensuring that the trust complies with laws and regulations, and that the assets are managed wisely. They provide expert advice and support, contributing to the success of the entire production.

The Importance of Clear Roles

Each actor in the living trust has a specific role to play, and understanding these roles is crucial for the trust’s success. The grantor (playwright) sets the stage, the trustee (director) manages the production, and the beneficiaries (audience) reap the benefits. Legal and financial advisors provide valuable support, ensuring that the trust operates smoothly and effectively.

Like a well-orchestrated play, with each actor in a trust plays a vital part. By understanding these roles, you can ensure that your trust functions seamlessly, providing peace of mind and security for your loved ones.

JMS Law is here to help guide you through these complexities and ensure your estate plan is executed as you intended. Contact Attorney Jill Santiago by clicking the link below.

A living trust is a common estate planning tool. When creating your trust, one of the most important choices you’ll make is who will serve as your trustee. In most cases, at the time you create your living trust, you will be your own trustee for as long as you are living and competent. But when you are no longer able to manage your trust, there are many things you should consider when deciding who will serve as your successor trustee. Let’s break down what a trustee does, what they are allowed and not allowed to do, and what you can do if you think a trustee isn’t doing their job properly.

The Trustee’s Role and Responsibilities

A trustee has a lot of power, which comes with a lot of responsibility. It is the trustee’s job to manage your trust’s assets and ensure your wishes are carried out for the benefit of your loved ones once you are gone.

 1) Acting in the Best Interests of Beneficiaries of the Living Trust or Estate Plan

A trustee has a “fiduciary duty,” which simply means they must act in the best interests of the trust’s beneficiaries. This includes:

• •   Loyalty: Putting the beneficiaries’ interests above their own.
  • Care: Managing the trust’s assets responsibly and prudently.
  •  Fairness: Treating all beneficiaries impartially.

 2) Managing the Trust Assets

The trustee’s job includes:

• •  Handling Assets: Investing and managing the trust’s assets wisely.
  • Distributing Funds: Making sure the beneficiaries receive their share according to the trust’s terms.
  • Record Keeping: Keeping accurate records of all transactions and providing updates to beneficiaries.

3) Keeping Beneficiaries Informed

Communication is key. The trustee should keep beneficiaries informed about the trust’s status and any significant decisions being made.

What a Trustee CAN Do

✅ Invest Trust Assets 

Trustees are allowed to invest the trust’s assets, but they must do so carefully, balancing risk and return to protect the beneficiaries’ interests.

✅ Hire Professionals

 Trustees can hire professionals like attorneys, accountants or financial advisors to help manage the trust. However, they must supervise these professionals to ensure everything is done correctly.

✅ Make Distributions

Trustees are responsible for distributing the trust’s assets to the beneficiaries as outlined in the trust document. This might include making discretionary decisions about when and how much to distribute.

✅ Charge Reasonable Fees

 Trustees can be compensated for their work, but the fees must be reasonable and are often specified in the trust document.

What a Trustee CANNOT Do

🚫 Self-Dealing

 Trustees cannot use the trust’s assets for personal gain. For example, they can’t buy trust property for themselves at a discount, make loans or gifts to themselves from trust assets, or funnel money from a trust account into a personal account.

🚫 Conflicts of Interest

 Trustees must avoid any situations where their personal interests could conflict with their duties to the beneficiaries. For example, a trustee must not invest trust assets into the trustee’s own business or that of a relative or friend, or sell trust assets to a relative, friend or business associate at a discount.

🚫 Negligence

 Trustees cannot be careless in managing the trust’s assets. They must follow prudent investment strategies and protect the assets and avoid risky investments, such as investing in crypto currencies

🚫 Ignoring the Trust Terms

 Trustees must follow the specific instructions outlined in the trust document. They cannot change these terms unless allowed by the trust or by law.

What to Do If You Suspect a Breach of Duty

Recognizing a Problem

 A breach of fiduciary duty happens when a trustee fails to act in the beneficiaries’ best interests or does not follow the trust’s terms. This might include:

• Mismanaging assets
• Failing to provide information
• Treating beneficiaries unfairly

Taking Action

 If you believe a trustee is not fulfilling their duties, you have several options:

Request Information: Ask the trustee for detailed reports and records.

Mediation: Try to resolve disputes through mediation before going to court.

Legal Action: If necessary, you can take the trustee to court. Remedies might include removing the trustee, recovering lost assets, or other penalties.

Preventing Issues

To avoid problems:

Choose Wisely: Select a trustee who is trustworthy and capable. Consider co-trustees or naming a trust protector who will manage disputes between the trustees and the beneficiaries.

Set Clear Terms: Make sure your trust document is detailed and clear about the trustee’s responsibilities.

Review Regularly: Periodically review the trust’s administration to ensure everything is in order.

Still Need Help?  Consult A Professional

Choosing a trustee is a critical decision in your estate planning process. Understanding what a trustee can and cannot do helps ensure your trust is managed properly for your beneficiaries. If you suspect that a trustee is not fulfilling their duties, it’s important to act quickly to protect your interests.

JMS Law is here to help guide you through these complexities and ensure your estate plan is executed as you intended. For trusted support, reach out to Jill M. Santiago Estate Planning Attorney.

Let’s face it. New England winters are harsh! As the chill of winter sets in, many Rhode Islanders migrate to warmer climates, spending the warm months up north, and the cold ones down south. We refer to them as “Snowbirds.” A Snowbird is somebody who leaves their colder, full-time residence to stay out the winter somewhere with higher temperatures. Traditionally, snowbirds have always been older, usually retired persons. However, with the increasing popularity of remote work, today’s Snowbirds are a more diverse population.

Snowbirds often maintain homes in Rhode Island (or Massachusetts) and Florida. While this lifestyle offers the best of both worlds, it can be very challenging if someone passes away while hunkering down for the winter. In this article I will talk about the issues that may arise when you split your residency between any two states.

First, Where is your primary residence, Rhode Island or Florida?

It is possible to have more than one residence. For income tax purposes, you are a resident of the state where you live for 183 days or more. But there are other factors that help determine where your primary residence is, such as driver’s license and vehicle registration, voter registration, or whether you own or rent your home. If you are filing a Rhode Island income tax return every year, you are probably a Rhode Island resident. If you are not filing a state income tax return, you are likely a resident of Florida (which has no state income tax). It is definitely worth mentioning here, that while you can have multiple residences, you can have only one domicile. Your domicile is a fixed place –  where you intend to return.

How To Determine Dual Residency and Your Domicile If You Have A Home In Rhode Island

Establishing your domicile—the place you consider your permanent home—is crucial for determining tax obligations and the applicable probate laws. If you split your time between Rhode Island or Massachusetts and Florida, the differences in the states’ laws can complicate matters at the time of death. To avoid confusion, you should clearly establish your domicile by spending more time in your preferred state. Other actions to take include registering to vote, obtaining a driver’s license, and using it as your primary address for tax returns and other legal documents.

Each state has its own set of laws governing wills, trusts, and probate. The estate plan you executed in Florida may not address some of the state specific issues, such as inheritance taxes, that present in Rhode Island and Massachusetts. Also, owning property in multiple states can trigger multiple probate cases. This can become a very stressful and expensive situation for your loved ones. You may avoid probate altogether by placing all of your assets into a living trust to avoid probate. An experienced estate planning attorney can also structure your living trust to protect your assets and minimize estate tax liability.

If you determine your state of domicile is different from what your estate plan documents reflect, you should meet with an experienced estate planning attorney in your new home state to update your plan.

Tax Implications To Consider As A Snowbird in Rhode Island

As a Snowbird, you must consider the complex landscape of state and federal estate taxes. For example, both Massachusetts and Rhode Island impose a tax on estates that exceed the current exemption amounts. Florida does not impose a tax on inheritance. However, even if you are domiciled in Florida, you may have to pay an estate tax on the property you own in another state. To determine which state’s tax laws are most favorable to you, review your assets – the value and where they are located – with an estate planning attorney and/or tax advisor so  you may take advantage of those favorable tax laws.

Medical Emergencies and Incapacity: Keeping Up With Healthcare Directives in Both States

Medical emergencies can happen anywhere, so having updated healthcare directives and powers of attorney recognized in both states is vital. Be sure to keep your advance healthcare directives and durable powers of attorney updated to ensure they are valid in both states. Consider keeping a copy of these documents at both residences or have them available digitally.

Make Sure You’re Protected With A Snowbird-Friendly Estate Plan

Planning ahead will give you peace of mind, allowing you to enjoy your time in both sunny and snowy locales without worry.If you have questions about your domicile or dual residency and your estate planning documents, click below to speak with an experienced estate planning attorney today.

People move around a lot these days. I am often asked about whether an estate plan created in a different state will still work after a move, or if an estate plan applies to property owned in another state. The answer is–it depends!

First and foremost, a will or trust that is validly drafted in one state is valid in another state under the “full faith and credit” clause of the U.S. Constitution. However, states have different requirements for valid estate plan documents and take different approaches to interpreting these documents. Here are some important things to consider if you are moving to a new state or own property in different states.

Different Laws: Uniform Probate and Trust Code vs. Common Law

As of 2021, only seventeen states have adopted uniform laws for probate and trust administrations. Massachusetts (MA) is one of them, Rhode Island (RI) is not. It is important to know whether your estate plan was created in a uniform state, or somewhere else. Some states have requirements that are more lenient than others.  For instance, about half of the states recognize a hand-written will, called a “holographic will”, as valid. Many states do not consider these documents to be valid wills, including RI and MA. Turns out that Michigan is one of the more lenient states, for example, some handwritten notes found stuffed in the cushions of Aretha Franklin’s couch were found to be a valid will under Michigan law.

Different spousal rights: community property vs. non-community property

If you are married and created your estate plan in a community property state (AZ, CA, ID, LA, NV, NM, TX, WA, WI), your spouse is entitled to essentially 100% of the marital assets. Many non-community property states allow a spousal elective share, which means a surviving spouse may force a share of your estate even if you disinherit them.

States that impose an estate tax: (a/k/a “The Death Tax”)

The federal government imposes a tax on estates that are over $13.61 million dollars per individual, as of 2024. This tax does not apply to most people! However, seventeen states and the District of Columbia impose an estate tax with a much lower exemption amount, including MA ($2 million per individual) and RI ($1.7 million per individual). If you created a plan in a state that does not impose a death tax, you may need to add some tax planning to your estate plan to minimize the taxes on your estate.

Formal vs. Informal probate

Many states have a simplified probate process for smaller estates. However, the asset limits differ from state to state. For instance, California allows an informal probate to be filed if the assets are less than $184,500.  Massachusetts allows a short form probate to be filed on estates with $25,000 or less in assets. Rhode Island, however, has a very low threshold of only $15,000. The majority of these small probate processes apply only to personal property and not to real estate.

Owning property in other states

You likely do not have to create a separate estate plan to address assets you own in another state. For instance, if you create a living trust in Rhode Island, you can transfer your Rhode Island home and your Florida condo into the Rhode Island trust. However, if you own a vacation home in Portugal, you will have to consult with an attorney in that country to ensure your asset is protected.

Whether or not any of these circumstances apply to you, it is best to have your estate plan reviewed by an attorney in the state where you reside. Moreover, it is important for you to update your plan when your circumstances change.

Talk to an experienced estate planning attorney to make sure you’re protecting your assets the right way

If you split your time between Massachusetts and Rhode Island, or plan to relocate, your estate plan may need extra attention. An experienced estate planning lawyer in Rhode Island can explain how the laws apply to your situation and help keep everything in order for your family. Contact the law offices of Jill M. Santiago by clicking the link below.

When creating an estate plan, it is not uncommon for people to overlook important details or resort to shortcuts that lead to complications down the road. Over the years I have become familiar with the many shortcuts people take in their estate planning and the many pitfalls of inadequate planning. If you’re making an effort to create an estate plan, you should do it right the first time.  In this blog post, I will explore some common pitfalls and shortcuts, and discuss how to avoid them.

Common Mistake: Procrastination. People not getting around to writing an estate plan at all 

The number one estate planning problem I see is people’s tendency to procrastinate! Often people completely kick estate planning down the road until it is too late, or fail to update an estate plan when needed.

Common Mistake:  Is creating a will or living trust  enough?

A will only becomes effective after you die. But if you become incapacitated during your lifetime and have not made any arrangements for who will manage your affairs, you could be heading for a guardianship or conservatorship. For a living trust to avoid living probate, your property must be transferred into the trust so that your successor trustee can manage your affairs.

Common Mistake: Adding children to your deed before you die – a big no no

Adding a child or children to the deed of a residence is a very popular estate planning shortcut.

This is most often done to avoid probate. Basically, when the parents pass away, the house is owned by the children already, and so probate is avoided. However, adding children to your deed while you are living involves giving up control of your property. For example, I recently discussed a situation with an elderly person who put their son on the deed of their home. Unfortunately the son had financial problems, and took out a mortgage on the house, then he passed away. The parent struggled to make the payments and needed a reverse mortgage to pay the debt. Because the property was also in the son’s name when he died, a full probate matter had to be opened in order to clear title to the property. This took months and cost the elderly person thousands of dollars.

Common Mistake: Relying on jointly owned property

Owning property jointly avoids probate at the first death, but what happens when the survivor dies?

Other issues relating to joint property include adding one child to an account for assistance with finances etc. At death that account is property of the survivor. This can create animosity if other beneficiaries feel they were treated unfairly. A solid power of attorney, or even better, a living trust, is a much better way to ensure your finances are handled by a trusted party if you are incapacitated, and that the property goes to the intended beneficiaries at your death.

Common Mistake: Relying on pay-on-death beneficiary provisions for accounts and insurance policies

Naming beneficiaries for accounts and insurance policies is a must. But often this information does not get updated when it should. For example, if your spouse is named beneficiary and predeceases you, will you remember to change the beneficiary? I recently met with a family in this situation. The parents had a pretty good estate plan, including a living trust, in order to avoid probate and make everything easy for their children. But a sizable life insurance policy ended up being property of the estate, forcing the family to go through probate. Naming a living trust as a contingent beneficiary will ensure that if your named individuals are no longer around those accounts or policies will be distributed to the proper parties.

Common Mistake: Disinheriting special needs beneficiaries

For people receiving government benefits such as SSI and Medicaid, inheriting property may result in loss of benefits. To avoid this, many people will simply leave a disabled beneficiary out of their estate plan altogether, and rely on the siblings or other family members to provide for the special needs person. This is a lot to ask of someone, and often results in resentments and disputes among the beneficiaries. Furthermore, disinheriting a child opens the estate up to litigation. Instead, special needs trusts should be utilized to provide for these beneficiaries. A special needs trust will provide a lifetime of security without jeopardizing much needed benefits.

Best Way To Secure Your Wealth: An Experienced Estate Planning Attorney

In conclusion, estate planning should include more than just what happens to your assets when you die. It requires a holistic view and requires attention to detail to avoid the common pitfalls and shortcuts that undermine your good intentions. Click below to book an appointment with estate planning attorney Jill M. Santiago.