CLIENT ALERT We strongly recommend that you review your existing estate plan in view of changes in your circumstances over the years as well as changes in the estate tax and related laws. We wish to call your attention to the following specific areas that require review: Designating Trusts as Beneficiary of IRA or Retirement Plans The IRS now permits a taxpayer to designate a living trust as the remainder beneficiary of an IRA, 401K or other retirement plan and still maximize the timeframe for taking required distributions from the plan based on the life expectancy of the oldest beneficiary of a particular trust share. In order to benefit from the new rules, a trust must have so called “conduit trust” provisions in the document. If your estate plan was signed prior to 2007 and you have named your living trust as the primary or contingent beneficiary of an IRA, 401K or other retirement plan, your trust should be amended to include the conduit trust provisions. Otherwise, naming a trust as the beneficiary may result in the payment of the entire IRA or plan to the trust within one to five years. Amendment of Living Trusts to Avoid Mass Estate Tax on the Death of the First Spouse As a result of the adoption by Massachusetts of a new estate tax, a typical plan for a married couple which sought to maximize the use of both spouses federal estate tax exemption to defer all estate taxes until the death of the surviving spouse, may now result in Massachusetts estate tax being due upon the death of the first spouse to die. For this reason, if you are married and your estate plan was signed between 1996 and 2002 and not amended, you must review your estate plan and determine whether any amendment to your estate plan is required in order to avoid the payment of Massachusetts estate taxes upon the death of the first spouse to die. We have sent two client alerts regarding this change. Medicaid Rules Modified to Extend Look Back Period Last year the President enacted legislation, since adopted by Massachusetts, that among other things extends the look back period on gift transfers from three years to five years for Medicaid eligibility purposes. If you are concerned about nursing home costs and your eligibility for Medicaid or are considering making gifts to your children, a careful analysis of your present personal and financial circumstances is recommended. New Massachusetts Health Care Proxy Under the federal enacted Privacy Rule of the Health Insurance Portability and Accountability Act (“HIPAA”) no person other than the patient may request or receive health care information, i.e., medical records, diagnoses, prognosis, billing information, etc., regardless of the patient’s mental capacity without HIPAA authorization. We have revised our Massachusetts health care proxy to authorize your health care agent under HIPAA to request, receive and make inquiry regarding a patient’s health care information. If your present health care proxy does not have enabling language under HIPAA, a new health care proxy is warranted. We will furnish a new proxy form to clients without charge upon request. Please contact us if you wish to discuss any of the matters referred to in this letter. |
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