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Matt Leonard

Peace of Mind Checklist

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Estate Planning Peace of Mind Checklist 

Please check the following questions that are important to you:

Happy senior man and woman couple dancing and holding hands after finishing medicaid with RI medicaid planning

________ I am concerned about losing my assets to the high costs of long-term care for myself and my spouse. Will we lose everything to pay for care, or are there options (Medicaid Planning)?

________ My child is disabled. How can I protect his or her future (Special Needs Planning)?

________ How can I set things up so my kids’ inheritance will be protected if they get divorced or are sued (Asset Protection Planning)?


________ My parents are aging. What should I know to help them to remain independent and protect their assets (Medicaid Planning)?

________ How can I minimize or eliminate paying taxes upon my death (Tax Planning)?

________ Do I have to be wealthy to benefit from a living trust? What are its benefits (Probate Avoidance Planning)?

________ If I can’t make legal and financial decisions for myself, how can I be sure my affairs are conducted in my best interest (Durable                        Powers of Attorney) ?

________ If I am too ill to make health care decisions for myself, how can I be sure my wishes will be carried out (Health Care Power of                               Attorney)?

________ How can I be sure my money and property end up in the right hands when I’m gone (Estate Planning with Trusts)?

________ My parent just passed away. What do I do now (Probate Administration)?

Many of our clients came to us with the same questions. They all seek the same thing: PEACE OF MIND FOR THEMSELVES AND FOR THE ONES THEY LOVE.

Estate Planning is a general term the encompass each of the stated questions and concerns above. The paths of Estate Planning are:

  • Medicaid Planning
  • Special Needs Planning
  • Asset Protection Planning
  • Tax Planning
  • Probate Avoidance Planning
  • Long Term Care Planning
  • Disability Planning – Powers of Attorney – Financial and Medical
  • Planning with Trusts
  • Probate and Estate Administration Planning


Call our office today at (401) 274-0300

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Can I Keep My IRA and Apply for Medicaid?

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Charming senior man and woman reading their Roth or Traditional IRS at their house

Answer: Keeping your IRA depends on what state you reside in. In Rhode Island, you are allowed to keep your IRA, provided you anuitize it. In Massachusetts, you are not allowed to keep it.

To protect your Roth or Traditional IRA’s, you do need to annuitize the IRA and start drawing the minimum required distribution from them. If you do not annuitize them, they will be deemed an available resource and will need to be liquidated and spent on your care.

Rhode Island Department of Human Resources Regulation 0382.15.30
regarding Retirement Funds (REVISED: 06/1994) provide as follows:

“Retirement funds are annuities or work related plans for providing income when employment ends (such as a pension, disability or retirement plan administered by an employer or union), or funds held in Individual Retirement Accounts (IRA’s), or plans for self- employed individuals, sometimes referred to as Keogh plans.

An applicant who owns a retirement fund must apply for the benefits of such fund or liquidate the fund. However, the applicant is not required to terminate active employment in order to make a retirement fund available. If the applicant must terminate employment in order to receive benefits from the retirement fund, the fund is not accountable resource.

If the applicant is eligible for periodic retirement benefits (monthly, quarterly payment,etc.), the retirement fund is not a resource, but the payments from the fund are unearned income when received.

If an applicant owns a retirement fund and is not eligible for periodic payments, but has the option of withdrawing the funds, the retirement fund is counted as a resource. The resource is the amount the applicant can actually withdraw from the account. If there is a penalty assessed for early withdrawal, the resource is the amount available after these penalties are deducted. If taxes are owed on the funds, any taxes due are NOT deducted in determining the value of the retirement fund”.

Though the funds themselves are protected from liquidation, the income stream generated from them are deemed income and an available resource and available to a person on Medicaid.

Want to learn more and how this rule applies to you?

Contact our office for a consultation.  Call (401) 274-0300MJL Blog Footnote


Protecting the Elderly from Financial Exploitation

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Elder Law involves protecting all aspects of the individual – and sometimes it involves protecting them from themselves from exploitation by swindlers.  A comprehensive Estate Plan can address, minimize and prevent your loved ones from exploitation by swindlers.

How Many Seniors Are Being Exploited?

Seventeen percent of Americans over the age of 65, or 6.8 million people, have been taken advantage of financially through high fees, inappropriate investments or outright fraud, according to a new survey. The findings, the results of a survey done by Public Policy Polling for the Investor Protection Trust, represented an improvement over a similar study taken in 2010, which discovered 20 percent of seniors had been victimized. Investor Protection Trust is a nonprofit organization devoted to investor education and protection.

Those involved in the study said seniors, over time, have become better educated about financial matters, and that both the children and health care providers of seniors are more aware of medical problems that might diminish older people’s ability to make decisions about money.

What to Do When A Loved One Gets Exploited

Sadly, family members learn of a parent being the victim of being exploited financially only after the fact, the funds have been absconded with, and mom or dad reluctantly share their experience. In such cases, you should:

  1. Notify the police and provide them with whatever information you have as to what was taken and who the perpetrators were;
  2. Contact your insurance companies – often homeowners policies will contain coverage in the event of theft and criminal activity.

Want to make sure your loved ones are protected from being exploited? Here is a checklist of things to do when someone has been exploited. An estate plan consisting of Trusts and restricted bank accounts may be an initial step toward preventing your loved one from becoming a victim.

Contact us to discuss a plan that helps the ones you love.

Read the Full Article from Chicago Tribune.

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Estate Plans With Income Tax Strategies

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Today, you generally do not need to be concerned about federal estate taxes unless your net worth approaches $5 million (about $10 million if you are married). For 2016, the federal estate tax exemption is $5.45million per taxpayer and the exemption is scheduled to be annually adjusted for inflation. The exemption is the amount, reduced by any taxable gifts you made during life, which can pass tax-free to your heirs upon your death.

As the higher, inflation-indexed estate tax exemption was permanently signed into law, the top ordinary income and long-term capital gains rates increased approximately five percentage points each, to 39.6% and 20%, respectively. In 2013, the 3.8% net investment income tax went into effect for higher-income taxpayers and at thresholds lower than those triggering the top income tax rates.

So, for higher-income taxpayers and people with higher-income heirs, income taxes are important to plan for. However, even middle-bracket taxpayers should factor income taxes into their estate planning to minimize tax liability for themselves and their heirs. After all, why pay, say, even a 15% federal tax on a capital gain if, with careful planning, your family could avoid incurring any federal taxes on that gain?estate-tax-return.ashx_

Two Valuable Income Tax Strategies
Several income-tax-saving strategies can be incorporated into an estate plan. However, the following are two of the most valuable that most taxpayers can take advantage of:

  1. Hold on to appreciated assets — unless you have loved ones eligible for the 0% rate. Inherited assets receive a step-up in basis to their fair market value on the owner’s date of death. The recipient can then sell the appreciated assets shortly after receiving them and owe little, if any, income tax on the sale. So, if estate taxes are not a concern, holding on to both assets that have already appreciated and assets that you expect to appreciate significantly in the future can be beneficial. However, if you would like to dispose of an appreciated asset and you have loved ones in the 10% or 15% bracket for ordinary-income taxes who thus are eligible for the 0% rate on long-term capital gains, consider gifting it to the loved one to sell. This might require a gift tax return to be filed.
  2. Make charitable donations during life. If you are charitably inclined, consider maximizing your lifetime donations rather than waiting to make large charitable bequests at your death. Properly substantiated lifetime gifts to qualified charities generally provide an income tax deduction (and reduce the value of your estate), while charitable bequests provide only an estate tax deduction, which you will not need if your estate is below the exemption amount.

Before making significant charitable gifts, be sure to consider your cash flow needs and the legacy you want to leave. Also, keep in mind that your annual income tax deduction for charitable donations is limited to a percentage of your adjusted gross income (AGI) — 50%, 30% or 20%, depending on the type of gift and charity. Contributions exceeding the applicable AGI limit can be carried forward for up to five years.

Stay AlertIRSbuilding_0
As you consider — and perhaps implement — these income-tax-savings strategies for your estate plan, you also need to keep an eye on two things: 1) Your net worth, and 2) Congress. If you have a financial windfall or simply enjoy a steady increase in compensation or investment performance, your estate could be boosted to a size where federal estate taxes become a concern. And, while the high, inflation-adjusted estate tax exemption has no expiration date, Congress could pass legislation to reduce it at any time.

Medicaid Planning Issues

Obviously, the above items do not work in the context of Medicaid Planning. Gifting of assets, holding onto appreciated assets work for estate planning strategies and tax strategies – but not for Medicaid Planning strategies. While an Irrevocable Income Only Grantor trust does allow for tax basis planning opportunities, charitable gifting during lifetime and within 5 years of applying for Medicaid will be a disqualifying transfer of assets.

Whatever happens, be ready to revisit your estate plan and, if necessary, alter your strategies based on changing circumstances. Be sure to consult with appropriate financial, tax and legal professionals. Want to discuss your plans?  Contact us to schedule an appointment.

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10 Questions About Durable Power of Attorney

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Durable Power of Attorney

Whether young or old, married or single, a durable power of attorney can be an effective, time saving and cost avoiding document that all persons should consider including in the Estate Plan.

  • What is a power of attorney?

A power of attorney is the grant of legal rightsPower of Attorney and powers by a person, the “principal,” to another, the “agent” or “attorney-in-fact.” The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial and business matters. The attorney-in-fact can do whatever the principal may do—withdraw funds from bank accounts, trade stock, pay bills, cash checks—except as limited in the power of attorney. This does not mean that the attorney-in-fact can just take the principal’s money and run. The attorney-in-fact must use the principal’s finances as the principal would for his or her benefit.

  • When does the power of attorney take effect?

Unless the power of attorney is “springing,” it takes effect as soon as it is signed by the principal. A “springing” power of attorney takes effect only when the event described in the instrument itself takes place. Typically, this is the incapacity of the principal as certified by one or more physicians.

  • Does the power of attorney take away a principal’s rights?

No, absolutely not. Only a court can take away a principal’s rights in a conservatorship or guardianship proceeding. An attorney-in-fact simply has the power to act along with the principal.

  • Can the principal change his or her mind?

Certainly. A principal may revoke a power of attorney at any time. All a principal needs to do is send a letter to his or her attorney-in-fact telling them that their appointment has been revoked. From the moment the attorney-in-fact receives the letter, he or she can no longer act under the power of attorney.

  • Can an attorney-in-fact be held liable for his or her actions?

Yes, but only if he or she acts with willful misconduct or gross negligence.

  • Can an attorney-in-fact be compensated for his or her work?

Yes, if the principal has agreed to pay the attorney-in-fact. In general, the attorney-in-fact is entitled to “reasonable” compensation for his or her services. However, in most cases, the attorney-in-fact is a family member and does not expect to be paid. If an attorney-in-fact would like to be paid, it is best that he or she discuss this with the principal, agree on a reasonable rate of payment, and put that agreement in writing. That is the only way to avoid misunderstandings in the future.

  • What if there is more than one attorney-in-fact?

Depending on the wording of the power of attorney, you may or may not have to act together on all transactions. In most cases, when there are multiple attorneys-in-fact the power of attorney document specifies that they can each act independently of one another. Nevertheless, it is important for them to communicate with one another to make certain that their actions are consistent.

  • Can the attorney-in-fact be fired?

Certainly. The principal may revoke the power of attorney at any time. All he or she needs to do is send the attorney-in-fact a letter to this effect. The appointment of a conservator or guardian does not immediately revoke the power of attorney. But the conservator or guardian, like the principal, has the power to revoke the power of attorney.

  • What kind of records should the attorney-in-fact keep?

It is very important that the attorney-in-fact keep good records of his or her actions under the power of attorney. That is the best way to be able to answer any questions anyone may raise. The most important rule to keep in mind is not to commingle the funds the attorney-in-fact is managing with his or her own money. Keep the accounts separate. The easiest way to keep records is to run all funds through a checking account. The checks will act as receipts and the checkbook register as a running account.

Want to learn more about Durable Power of Attorney’s? Contact our office to schedule a no-cost consultation to discuss how Powers of Attorney fit into your current Estate Plan.


Learn The 9 Things Every Trustee of Real Estate MUST Do!

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Trustee of Real Estate Checklist

Many people realize the benefits of transferring the ownership of real estate over to a Trustee of a Trust. Often times the people who create the trust serve as Trustee. However, sometimes Trustees are called upon to take a more active role in managing a property. If and when that day occurs, the Trustee must be prepared to spring in action or run the risk of being accused of breach of their fiduciary responsibilities.

FRET NOT TRUSTEES – we have a checklist of things you need to do when you are called to action.

There are a whole host of things, but among some of the more important, you should consider if a residence will be vacant for an extended time:

  1. Changing locks;
  2. Making a detailed inventory of valuables and keeping them stored safely;
  3. Installing an inexpensive security system (which will dial out to  security agency in the event of a break in);

    Trustee’s who hold title to real estate have much to do!

  4. Monitoring pipes if in a colder climate;
  5. Requesting mail be forwarded;
  6. Halting newspaper deliveries;
  7. Advising homeowner’s insurance agent of the vacancy and make sure property is adequately insured;
  8. Arranging for condo and/or coop fees to be paid on a regular basis.
  9. Figuring out whether to keep utilities on or off.

Also, while seeming obvious, do not forget to check: To see if there are perishable items in the residence or in storage and address them accordingly; If there are pets or other animals that need care and/or homes.; Whether property and casualty insurance coverage continues on personal effects, motor vehicles and items in storage.

Conclusion: If you are a Trustee, it is advisable to seek assistance from a professional who can help you navigate issues that arise when taking on the responsibility of a fiduciary.


Estate Executor Not Liable For Unpaid Taxes

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Executor Faced With A Tax Bill Without Any Funds To Pay It

NEWS FLASH:  Executor of an estate was subject to federal estate tax, but didn’t have enough assets to pay the tax. (Many of the estate assets were not probate property, such as joint accounts owned with persons other than the decedent’s spouse.) The estate tax return (Form 706 was filed, but the estate tax wasn’t paid.

To satisfy the estate tax, the executor obtained a restraining order over jointly-owned accounts and sought contributiestate-taxons from estate beneficiaries. Eventually, contributions from two beneficiaries and funds from the joint accounts were received and then used to pay federal and state estate taxes and an amount distributable to a beneficiary.

The IRS issued a notice of fiduciary liability to the executor, saying he was liable under IRC Sec. 6901 for the amounts distributed to the state and the beneficiary. The Tax Court disagreed, determining that because the estate wasn’t insolvent at the time of the distributions, the executor wasn’t personally liable for the federal tax deficiency. Scott Singer, TC Memo 2016-48 (Tax Ct.).

Concerned about the impact of taxes on your estate plan? Contact out office to discuss your options!

What Are The Top Rated Nursing Homes In Rhode Island?

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Nursing Homes Ratings in Rhode Island

US News and World Report has rated the top of the Rhode Island nursing homes and listed them on their website. Listed are those facilities with a rating of five stars from the federal Centers for Medicare & Medicaid Services for their overall performance in health inspections, nurse staffing and quality of medical care.

Do Rhode Island Nursing Homes Make the Grade?

About 31 percent of all nursing homes in Rhode Island earned an overall five-star rating. Visitors to the site can narrow their search for a Best Nursing Home by clicking on a metro area or region or by entering a ZIP code.

Know what services nursing homes offer.

Like any business or facility, each has its particular strengths and areas of improvement. Research must be done to determine if the nursing home you select offers the best care and expertise in the are your loved one is most in need of. Cognitive Issues, mobility issues, behavioral issues; know which nursing home can best address your loved ones needs.

Want to discuss what is the best nursing home is for you or a loved one and how you can pay for that nursing home? Contact us to schedule a consultation.

Click HERE for the full rankings.

US News Report