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Category Archives: Estate Planning

What is SSI and SSDI

There are a lot of people who think that Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are the same, and many use the terms interchangeable for programs that are very different. This article will explain the difference, how the programs are funded, who is eligible, who can receive benefits, and how much they pay.

How the programs are funded:

Social Security Disability Insurance (SSDI) is a program funded by social security taxes paid by workers, employers, and the self-employed. This means that the program is based on an employee’s past work history and is not a welfare program. The money used to fund this project is usually taken right out of an employee’s paycheck by their employer each pay-period. This deduction is commonly known as “FICA.”

Social Security Income (SSI) is funded through general revenues from taxes, and has no relation to your work history. This welfare based program is funded by the general tax revenue and has no relation to past work history. Each recipient receives a payment based on their need, if their income and assets are below a certain threshold.


To be eligible for SSDI benefits, the worker must earn sufficient credits based on taxable work credits to be insured for social security purposes. An employee can earn a maximum of four quarters each year, and you generally need 20 credits from the time the individual became disabled to be eligible. If you are under the age of 31, certain exceptions apply.

Finally, in order to receive the benefit, you must be a disabled worker, a widow(er), or an adult disabled since childhood. You must be under the age of 65 and have a significant physical or mental condition that is expected to last for at least 12 months, or a condition that is expected to result in death.

To be eligible for SSI, the recipient must have limited income and their resources must meet the living arrangement requirements. In addition, the recipient must be a United States citizen or national, or in one of certain categories of aliens. If this is met and your income and assets are below the eligibility levels, you are entitled to disability benefits.

For an individual to be eligible, their assets must be below $2,000. A married couple is eligible if they have combined assets below $3,000. There are also asset limits for families with children. For a complete list, please see the list at Assets typically include real estate, bank accounts, cash, stocks, and bonds. Some of the things excluded include the individual’s primary home, life insurance policies with face value of $1,500.00 or less, a vehicle (regardless of value if used as a primary transportation for the family), burial plots for individual members of his or her immediate family, and up to $1,500 in burial funds for the individual. Possessions may also be excluded if the resource cannot be readily liquidated, e.g., within 20 days, obviously with certain exceptions per case.


SSDI – The amount of the monthly disability benefit is based on the Social Security earnings record of the insured worker. This means that the amount is directly related to the amount of time you have been in the work force and the amount of money that you were earning during that time period. This is never a guaranteed amount of money. Things like workers’ compensation or state compensation benefits may reduce the amount paid by SSDI.

SSI – The monthly payment varies up to the maximum rate set by the federal government, which is often supplemented by the recipient’s state. The maximum federal benefit rate is $674.00 for an individual and $1,011 for a couple to help meet the costs of basic needs of food and shelter. Individuals who receive SSI are usually eligible to receive other benefits, such as food stamps, energy assistance, and section 8 housing. They may also be eligible for Medicaid and supplemental income from the state through the state’s supplemental program. States like Massachusetts will increase the cash assistance by over $100 for disabled individuals living independently.

SSI benefits will continue for as long as the individual is disabled. If medical improvements of the individual’s condition is possible, his or her case may be reviewed periodically to determine if he or she is still disabled. If the individual has enough credits from his or her work history to receive social security retirement benefits, he or she must apply for early retirement at age 62.

When to Update an Estate Plan

Massachusetts and New Hampshire estate plans, wills, trusts, and the like need periodic maintenance, just like a lot of things in life. Admittedly, they do not need constant maintenance like a car, boat, or house, but you cannot forget about it once you create one. As time passes things change in your life, and in order to properly carry out your wishes, you sometimes have to make changes. Below you will find some common reasons for updating an estate plan or will.

  1. Birth or death of a Beneficiary or Fiduciary.
  2. Divorce or Marriage.
  3. Change in the Law or Tax Law.
  4. Moving to a new state or change of permanent residence.
  5. A sudden increase or decrease in assets.
  6. Purchasing or Selling a Business.
  7. Beneficiaries reaching the age of majority.
  8. Planning for an estate of a person who is reaching the age of 70 ½.
  9. Disability or Illness.
  10. A substantial passage of time.

The list above illustrates some common reasons for updating your estate plan in Massachusetts and New Hampshire. A good rule of thumb: if you feel like your estate plan needs some updating, it probably does. At the very least, you could talk to an experienced attorney who can confirm whether your current estate planning documents will satisfy your final wishes.

Can a Doctor Refuse to Honor my Health Care Agent?

It is important to know that there are some situations where a doctor and/or private health care facilities can refuse to honor a health care agent’s request for treatment. The most important thing to understand here is that a health care agent in Massachusetts has no more authority than the actual patient.

Health care providers can refuse to honor an agent’s health care decision if the facility would not honor the decision even if the patient made it. For example, if the proposed treatment would be contrary to a formally adopted policy of the facility that can be expressly based on religious beliefs, and the facility would be permitted by law to refuse to honor the decision if made by the principal. In addition, a facility can never be compelled to do something that is illegal or against public policy, and doctors cannot be compelled to perform a medical procedure that is contrary to their moral or religious views. .

The facility must inform the patient or health care agent of such policy prior to or upon admission, if it is reasonably possible. Then the patient must be transferred to another equivalent facility that is reasonably accessible to the patient’s family and willing to honor the agent’s decision. If the facility or the agent is unable to arrange such a transfer, the facility shall seek judicial guidance.

Benefits of Having a Trust

There are practitioners out there who will say that everyone needs a trust, there are some who say that it depends, and there are some who will try to avoid them at all costs.  I am of the opinion that it really depends on your individual situation.  However, in order to determine whether you need a trust or not, you need to understand some of the benefits.

Avoiding Probate: Avoiding probate is probably the greatest advantages of having a trust.  The trust itself is its own entity, and this is what allows trust assets to pass outside of the probate process.  This single reason is often enough for many to create a trust, especially if that person has a large estate that would subject to an expensive and lengthy probate process. The time and fees that are involved in administering a larger estate can be enormous. With that said, sure, there are going to be fees and taxes involved in establishing most trust, but this is something that needs to be weighed before you go through with creating a trust.  The good news is, those initial fees usually outweigh the typical probate expenses.

Privacy: In addition to avoiding probate expenses, a trust also avoids the publicity of administering an estate.  The trust itself is not subject to the same disclosure as a will.  This means that you do not have to publish to the world what you are doing with your assets when you die, like you essentially due when you probate a will.

Control: Aside from providing for management of assets both before and after death, they protect the beneficiaries by giving control of the trust fund to the trustee by limiting the beneficiary’s rights to receive income or principal.  This is probably the only way that you will be able to protect the interests of your beneficiaries after you die, in the way that you believe to be in their best interest.

Beneficiary Protection: In addition to control, a trust protects the interests of the beneficiaries.  For example, it is not wise to leave money to younger children, it is usually not even permissible to leave money (without a custodian, guardian, etc.) to a minor child.  If assets are left directly to a minor child, that money will need to be held by that child’s guardian who must report to the court everything that he or she does with the assets until they reach the age of majority.  If a trust is utilized, your trustee will manage the assets and distribute income or principal based on the terms of the trust agreement, and the trustee is under no obligation to report to the court.

Disabled Beneficiary Protection:  Protecting the interests of disabled beneficiaries warrants its own section.  Most people do not understand, perhaps they do not know that if they give virtually any money to a disabled beneficiary that is receiving supplemental state or federal benefits, they are likely to lose those supplemental benefits.  With a properly drafted supplemental needs trust, the benefits of the disabled individual remain intact.  This type of trust allows a trustee to pay for the things that government programs will not.  In addition, it remains the complete discretion of the trustee distribute money from the trust.  This is how the trust preserves its assets from creditors and/or the government.

Those are some of the main benefits that you find in common trusts.  If you are interest in a trust, you have to evaluate your situation and find the appropriate kind of trust that matches the purpose that you would like the trust to serve.

Irrevocable Life Insurance Trusts

A lot of people understand that life insurance passes outside of the probate process, but what they don’t understand is that this does not protect the money from an estate tax.  For some reason there is a belief that if the money passes outside the probate process, the money is also not subject to estate taxes.  This is simply not true.  Pursuant to the Internal Revenue Code, when a beneficiary receives payment from a life insurance policy, they receive that money income tax free. However, any proceeds paid by a life insurance policy to beneficiaries is potentially taxable to decedent’s estate.  Since life insurance policies usually makes up such a large portion of a decedent’s estate, it is important to understand how an Irrevocable Life Insurance Trust can help in estate planning.

Creating an Irrevocable Life Insurance Trust can be an integral part of an estate plan.  Since the life insurance policy typically represents such a large portion of a decedent’s estate (usually tens-of-thousands to hundreds-of-thousands of dollars), having an Irrevocable Life Insurance Trust can be difference of having to pay an estate tax or not paying one at all.  By creating an Irrevocable Life Insurance Trust and making it both the owner and beneficiary you should be able to successfully prevent the payout from becoming part of the taxable estate.

In order to prevent a life insurance policy from becoming part of a decedent’s taxable estate, the trust must be named as both the owner and beneficiary of the policy during the insured’s lifetime.  The trust must also be be irrevocable, which means that the insured cannot retain any control over the policy, such as an ability to alter or amend.  By doing this, you will prevent the assets from becoming part of the taxable estate.  It is clear that you give up some rights by making the trust the owner and beneficiary of a life insurance policy, but you really do not give up that much.  When you purchase a life insurance policy, you typically want any payout to go to your spouse, children, grandchildren, whatever, and an Irrevocable life insurance trust allows your to do the same things. However, instead of those beneficiaries being listed on the insurance policy, they are listed in the trust document.  The trust then becomes the instrument that distributes the money to the beneficiaries.  The biggest drawback is losing the ability to update the trust if there is a change in family circumstances.

In addition to being able to list the same beneficiaries that you would have on your insurance policy, you will also be able to draft different provisions into the trust that will protect the beneficiaries’ interests, and also be able to draft provisions that can help distribute the money under conditions that you feel are appropriate.  So, in essence, you give up some control while you are alive, but are afforded other benefits that make up for it when you are deceased.  For example, you can direct the trustee to pay the proceeds when your children reach a certain age or attain a certain degree.  You can also include spendthrift provisions, or you can direct the trustee not to pay out money if the beneficiary is dependent on drugs, has a gambling problem, or if the payment would affect supplemental needs benefits.  This type of planning protects both your interest and the interest of the beneficiary.

Finally, the cost of all this.  As you know, nothing is free, and making an irrevocable gift is no exception.  When you designate an Irrevocable Life Insurance Trust the beneficiary of an insurance policy, that gift becomes taxable, although there are ways to minimize the gift taxes.  How to minimize the gift tax is completely dependent on your situation and, unfortunately, something that cannot be easily described right now.

If you are interested in Irrevocable Life Insurance Trust, you are encouraged to contact the office for more information.  The office can help explain the above and help demonstrate how you will benefit form this type of trust.

Pet Trusts

Yes, they are a real thing, and at least 43 states and the District of Columbia have enacted pet trust statutes.  In January, 2011, Governor Deval Patrick signed into law “An Act Relative to Trusts for the Care of Animals,” and that law took effect in April, 2011.  This article will discus what they are designed to do and why they are good for the commonwealth.  I know that most people might laugh at the sight of this article but, if anything, it is a fun read.

What they are designed to do: a pet trust is really no different from any other type of trust.  A pet trust is designed to hold assets for the benefit of a designated beneficiary.  In this case, the beneficiary is your pet(s). It appoints a fiduciary (trustee) to carry out what is set forth in the trust document, just like any other type of trust.  The only real difference is that the trust also appoints a caretaker.  This is the person in charge of managing the pet(s)’ maintenance, health, and welfare.  It seems like the caretaker is similar to a guardian.  As you can see, nothing that different from any other type of trust out there.

They are beneficial to the Commonwealth, because:  In today’s society, more and more people are treating their pets as part of their family.  Many people even want to care for these pets when they die or become incapacitated.  But until this law was enacted, requiring someone to care for your pet was not backed by the law.  This was true even if you put away money specifically for this purpose.  The person that was named to care for the pet was free to do whatever he/she wanted to do with the money and the pet(s).  Meaning, they could take the money that was left for Fluffy, drop him off at the pound and go spend the money on whatever he/she pleased, and there was nothing that could be done about it.  A pet trust solves these problems.  This law makes the trustee and caretaker responsible for the care of the pet(s).

This also takes the burden off of shelters.  With the state of the economy, shelters have become inundated with abandoned and uncared for pets.  This has left shelters strapped for cash and often overcrowded.  WIth a pet trust, you plan for your pet’s care before you die or become incapacitated.  This alleviates the burden on loved ones finding a new home for your pets.  It also prevents them from dropping the pet off at a shelter where his future becomes uncertain.

Coming for the guy who had a picture of a dog put on the home page of his law firm, I do not think this is a bad idea.  I must tell you, however, I do not have a pet trust.  If by creating a pet trust gave me peace of mind in knowing that my pet is cared for, does not end up in a shelter, and does not become financial burden on someone else, I am all for it.

A Proper Estate Plan

Depending on the size of your estate, a typical estate plan includes at least the following:

  1. Last Will and Testament
  2. Power of Attorney
  3. Health Care Proxy
  4. HIPAA Release
  5. Living Will*

Last Will and Testament:  Most people are familiar with what a will is and what it does.  It is a written instrument that disposes of your assets when you pass away.  It is the document in charge of distributing all the things that you have acquired throughout your life.  Your will is the document that is in charge of saying who gets what, who is going to care for your minor children, how your debts will be repaid, how taxes are to be paid, and how the probate expenses will be paid.

The person in charge of “administering” your estate is known as your “executor.”  The executor is the person that you appoint in your will to carry out your final wishes.  It is your duty to appoint someone who is honest, trustworthy, and competent enough to carry out your wishes.  It ultimately comes down to the executor to carry out your final wishes.

Your will is a powerful document.  It tells the world what you want to happen with all your things.  Not only is it important, it is an essential document of your estate plan.

Power of Attorney:  a power of attorney (POA) is another important document.  This document, however, grants power on another to make financial decisions for you; decisions that they believe to be in your best interest.  This document is the exact opposite of a will.  As stated above, when you create a will, you appoint someone to carry out what you have instructed him/her to do.  Your POA, on the other hand, makes the decisions that he/she thinks are in your best interest.  This is why you have to pick someone who is both competent and trustworthy.

So, why would you want to give someone this much control over your finances? That answer is simple.  As you age, you are much more likely to become incapacitated or unable to handle your affaires before your die.  Sure, you have a will, but you might not have an estate to administer if you become unable to handle your financial affaires before you die.

Health Care Proxy:  this is the document that appoints someone to make medical decisions for you, if you become unable to make those decisions for yourself.  You want this person to be someone who is both familiar with how you would like to be medically treated and familiar with the world of healthcare.

HIPAA Release:  this document instructs anyone holding your medical records to release those documents to your designated agent.  This document makes perfect sense.  Anyone holding your medical records is compelled, pursuant HIPAA, not to release your medical records to anyone who is not expressly authorized by you.  This document allows your agent to gain access to those records without unnecessary obstacles. It is easy to create, cheap to prepare, and often overlooked.

Living Will:  this document tells the world that you do not want your life to be artificially prolonged. For example, being kept alive by machines, such as a feeding tube or an artificial breathing machine.  This is an important document to include in your estate plan.  This document, however, come with a BIG issue.  Although preparing this document tells the world that you do not want your life to be artificially prolonged, no one has to abide by those wishes.

So, why prepare it?  The simple answer is that it tells your loved ones what your true beliefs are.  Although not legally enforceable, it offers your family guidance that most are willing to abide by.

There you have it, those are the documents that most americans should have in their estate plan.  Most americans, meaning those who have an estate that is less than $1,000,000.00.  For those who have more than $1,000,000.00 in their estate, have disable family members, or want to avoid estate taxes or probate, you will need a more comprehensive estate plan.  More to come.