Newsletters

2014

I take this opportunity to send holiday greetings and this year to offer information about real estate law and practice. The most important asset in a person's family balance sheet is often their residence. What makes real estate a valuable asset depends on a several factors. Most real estate brokers would probably cite the location of the residence—is it situated in a sought-after town? Another factor is one universal to most assets: whether the home can be bought and sold relatively easily. Anything that interferes with the process should be eliminated wherever possible.

One such issue is the subject of this article: the problem of improperly or un-discharged mortgages which this author estimates are discovered in as many of a quarter of all pending sales. Over the past few years, this problem of paid-off but un-discharged mortgages creating a cloud on the title has grown. It has caused hardship to both buyers and sellers alike, delaying or sometimes derailing closings. The problem has been amplified by the number of lending institutions entering, exiting or merging in the market each year. The sheer numbers of refinance and sale transactions have skyrocketed. In addition, the same loan might be sold or transferred to different lenders three, four or five times before being paid off. The same property that might have been refinanced multiple times is then offered for sale. Sellers are too often greeted with a nasty last minute surprise before their closing—that one or another of their past mortgages were never discharged or were improperly discharged. "Improperly" usually means that the lender, who actually signed the recorded discharge, is not the lender which the chain of title indicates is the owner of the loan. How can this be?

What happens is that, in many cases, the lender who actually receives a mortgage payment check is only the "servicing" lender, not the lender who "owns" the mortgage according to the Registry of Deeds. The servicing lender is also only too happy to receive a payoff check to pay the mortgage in full at some prior purchase or refinance closing, but then fails to have the proper entity sign the discharge document. Other lenders just flat-out fail to file any discharge whatsoever. On occasion, the borrower may receive the discharge document themselves, but fail to understand that THEY are then responsible to record that document in the Registry of Deeds. As of 2006, statutory revisions in Massachusetts tried to address the problem by amending G.L. c.183 § 55. That law now requires a lender to discharge a paid-off mortgage within 45 days. Failure to do so makes the lender "liable in damages …of $2,500 or the actual damages sustained" by the homeowner plus "reasonable attorneys fees and costs".

That has not solved the problem. Lenders blatantly ignore this law, and Sellers, even though frustrated by the infuriating delays in filing discharges, most often opt not to litigate to seek damages. They mostly just want to sell their house and move on. The law does offer an option to file supporting "documentation" as defined in the statute along with an affidavit signed by an attorney involved in the transaction, but sellers do not often have all the required "documentation" that is required.

When discharge documents are inaccurate, one of two things happen at the Registry of Deeds. The discharge is recorded, but because the information is inaccurate, a title search will never reveal the filing. Computers are not, sadly, trained to look for documents that are "close", but not quite correct. Second, a Registry of Deeds may simply return the faulty discharge document to the lender for correction. The Middlesex South Registered Land section returns as many as 30% of the discharges they receive. More often than not, the offending lender places the returned discharge in a file and forgets about them.

I recently represented a Seller who faced the task of needing to track down and record nine (9) discharges that were returned by the Registry to lenders as being inaccurate (and no further action had been taken by the lenders). It took over three (3) months to completely clean up this legal mess, and cost the seller in fees they were forced to pay to me that could not be recouped from the various lenders, as it was not cost effective to sue them.

How can a seller protect itself from such a last minute disaster? There are several recommended steps a seller should take regarding mortgage loans that are paid off:

  1. Retain for future retrieval, copies of any settlement statement (often referred to as a "HUD") confirming that a loan was paid off. A HUD is most often requested by a lender to prove to them that their loan was paid-off. Unfortunately, lenders often purge their computer system of records after a year or two, leaving their "research dept." to chase down evidence of payment of paid-off loans. Such "research" takes time.
  2. Request and retain copies of payoff statements, payoff checks and transmittal letters sent by a closing attorney in charge of paying off the old mortgage loan. Next to the HUD, this documentation is the best evidence that the loan was paid, and which lender that received the money.
  3. If a loan was paid off in a purchase transaction, be sure to purchase owner's title insurance. A title insurance company will then take on the cost and the task of retrieving the proper discharge, if that need arises.
  4. Retain any letter received from the lender that may simply say something like "congratulations; your loan has been paid in full". If photocopies of discharge papers are included with the letter, keep that also.
  5. Before putting property on the market for sale, a Seller should engage their attorney to conduct a title rundown. This will reveal whether the seller has a discharge problem. Then request counsel to begin the task of tracking down the discharge so that the document will be available for an anticipated closing. As indicates above, it can sometimes take months to nudge a lender to perform their legal obligations. Start this job early, to avoid closing delays.

Taking these simple steps may avoid more expensive and stressful surprises shortly before any home sale closing.

My law practice continues to grow in the areas of estate administration and settlement, estate planning, taxation, and estate/probate administration. I also represent clients in all types of real estate transactions, mortgage financing and contract matters, as well as criminal, personal injury, and business law. My office at 5 Militia Drive in Lexington is a bright, first floor location with plenty of free parking. I invite you to visit my firm's updated web site at http://www.georgefootepc.com; you can also contact me electronically at [email protected]. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2014 and I wish you and yours good health, good times, and peace in 2015.

------ George E. Foote, J.D., L.L.M. in Taxation

2013

Season's Greetings from the Law Office of George E. Foote, P.C.

I am pleased for this opportunity to offer both holiday greetings and estate planning information.

Much of my practice involves assisting clients in settling the estate of a deceased loved one. I am sometimes hired to handle lawsuits involving estates, trusts, and claims of "self-dealing" by those in charge of a person's estate assets. Even more of my time is spent advising clients in the planning of their estates and deciding who will receive their estate and equally as important, who they will choose to manage their affairs in their declining years. This is embodied in the decision by the elder granting someone, often an adult child, a power of attorney. As a holder of the elder's power of attorney, that adult child of the elder becomes the elder's "agent" (or, as I have referred to in this article, an "agent-holder").

Powers of attorney are "durable" if the document states that it will not be affected by the future mental disability of the grantor. This means that the authority granted under the document "survives" even if the grantor loses his or her mental faculties. Powers of attorney can take effect immediately, or can be "springing" i.e. "spring" into effect upon the happening of a certain event. The "event" is often stated as the written opinion of one or more than one physician giving an opinion that the elder is no longer capable of handling their own financial affairs. "Springing" powers of attorney might seem more attractive in concept, since they lie dormant until needed, although there can be practical problems faced by an agent-holder when they seek to use such a document. This is because a bank or investment house might require varying degrees of additional documentation to prove that the "trigger" which allows the power of attorney to "spring" into effect, making the document useable.

Much has been written about the extent of the powers granted under a power of attorney. In a few states, holders of powers of attorney granted by elders are deemed automatically to grant certain "powers", such as the authority of the agent to create a trust and to pay themselves compensation. The general rule, however, in Massachusetts and most states is to the contrary. Unless specifically authorized in the document, the agent-holder of a power of attorney cannot assume they have implied authority or "power" to perform certain acts unless specifically stated in that document.

This was the case in Treat v. Executive Office of Health and Human Services, 76 Mass App 1121 (2010), where the Mass Appeals Court examined the use of a power of attorney to pay the agent-holder of a power of attorney for services claimed to be performed by the agent. The Court held that since the power of attorney document did not authorize compensation for the holder, then none could have been lawfully paid. The rule set out in Treat was consistent the long standing rule of law in Massachusetts that a power of attorney must be strictly construed and interpreted Wood v. Goodridge, 60 Mass. 117, 6 Cush. 117 (1850), Hoyt v. Jaques, 129 Mass. 286 (1880), and Williams v. Dugan, 217 Mass. 526 (1914). There is also a long-standing tax case ruling that a holder-agent of a power of attorney has no implied authority to make gifts of the grantor's money to others (including himself) Estate of Casey v. Commissioner, 948 F.2d 895 (4th Cir. 1991). Similarly, in Goldstein v. Page, 78 Mass App 1113 (2010), the Appeals Court ruled that there was no language in the POA in that case expressly authorizing the making of gifts, and held the gifts made there were illegal transfers. Making gifts can often be a useful estate planning tool to reduce the size of an elder's estate, which in turn reduces potential estate taxes when the elder dies. A properly drawn POA usually includes that power.

This long-standing legal principle puts the agent-holder of a power of attorney in a delicate and seemingly contradictory position. I have found that some clients over the years have the impression that the granting of a power of attorney to a relative, gives that relative expansive sometimes absolute rights and powers over the elder's assets, while legally, the opposite may be the case.

The lesson, of course, is that it all depends upon how your power of attorney is worded. In most cases of course, the elder signing a power of attorney will want to give his/her holder-agent as much authority as possible in case the elder becomes seriously ill or loses their mental faculties.

Sadly, an inadvertent omission in a power of attorney document cannot be corrected if the elder becomes mentally incompetent. A legally incompetent person cannot create any legally binding documents, so from that point of view, it might be more prudent to make a power of attorney document as expansive as possible. Having said that, what about concerns that a power of attorney document may be too broad and the agent-holder may misuse their power?

The answer is that an agent holding an elder's power of attorney has "fiduciary" responsibilities. Fiduciaries, for example, cannot legally perform any act in that role that would favor themselves at the expense of the elder. In fact, if a fiduciary is accused of undue influence or self-dealing, they have a heightened legal burden of proving the absence of wrongdoing. They must thus "prove a negative", which is a difficult, even if not an impossible task. In the cases I have litigated, this legal principle has been a formidable legal weapon against a dishonest fiduciary.

In all cases, the best way to avoid inter-family conflict and litigation involving a power of attorney is, of course, full disclosure of information by the agent-holder and periodic consultation among all interested parties, even if this is technically not legally required. Thoughtful estate planning can also curtail potential disputes before they boil over into a formal dispute. Of course, if hostilities are open, raging, and beyond healing by simple discussion, then it is time to seek the shelter of competent legal advice.

My law practice continues to grow in the areas of estate administration & settlement, estate planning, tax planning, and estate and "fiduciary" litigation. I also represent clients in all types of real estate transactions and contract matters, as well as criminal, personal injury, and business law. My office at 5 Militia Drive in Lexington is a bright, attractive, first floor location with plenty of free parking. I invite you to visit my firm's updated web site at http://www.georgefootepc.com/; you can also contact me electronically at [email protected]. You might also enjoy reading my Law Information Blog at http://www.georgefootepcblog.com/. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2013 and I wish you and yours good health, good times, and peace in 2014.

------ George E. Foote, J.D., L.L.M. in Taxation

2012

I again take this opportunity to send holiday greetings and to offer estate planning information. These days everyone is discussing the "fiscal cliff" and the apparent inability of the U.S. Congress to prevent a wholesale slew of budget cuts and tax increases that some experts say could jolt the economy into another recession. In Congressional history, very few logjams have actually created the disaster feared. Congress has almost always found a way to reach a compromise, however uninspiring, which saves us from potential economic disaster.

Some of the concern surrounds the Federal Estate Tax and its scheduled reversion to a $1 million taxable threshold on January 1, 2013, if Congress fails to act. Many estate planners believe, me included, that Congress will save us from a jarring increase in the Federal Estate Tax. Even the President's plan recommends no less than a $3.5 million taxable threshold. His willingness to negotiate the threshold is seen in the last major estate tax legislation on December 17, 2010, when the threshold rose from $3.5 million to $5 million. The Federal estate tax simply does not produce that much revenue, having been gutted by more than thirty years of successive changes which weakened its tax bite. It is possible that Congress may wait beyond the January 1, 2013 date to enact new changes, if only so that the new Congress can boast to its constituents that they have been effective in "lowering taxes" (a boast made possible solely by their inaction in 2012). Since any Federal Estate tax return would be due only as of nine (9) months following the date of death, it is entirely possible that Congress could wait as long as until August 31, 2013 to make any final changes to this!

Apart from possible tax increases arising out of the eventual resolution of the "fiscal cliff", taxpayers earning more than $200,000 (i.e. adjusted gross income –"MAGI"), and married couples filing jointly with more than $250,000 will be subject to the Obama Care surtax, effective as of 2013. The 3.8 percent tax applies investment income (dividends and capital gains), but only to the extent it would exceed the $200,000 ($250,000) MAGI level.

Conventional end-of-year tax wisdom has always been to offset any gains by selling investments that would produce a capital loss. This way, net gains are reduced, and capital gains taxes would be lower. Second, consider gifting investments that gone up in value to charity, including your religious congregation, if you have one. You get a deduction for the full amount of the stock, even though you have never "cashed-in" by selling the stock first.

But do the Obama Care surtax and the possibility of "fiscal cliff" tax increases turn that strategy on its head? In other words, might it be better to "save" your tax-savings strategies for use in 2013, when tax rates will be higher and there will be a surtax to contend with (if you earn over the threshold)? If you are a pessimist and "save" your strategies for 2013, you may wish you hadn't, if Congress sets a higher rate threshold at a point lower than what you will make in 2013. I regret to say my crystal ball does not say which way the tax winds will blow.

My law practice continues to grow in the areas of estate administration and settlement, estate planning, taxation, and estate administration. I also represent clients in all types of real estate transactions, mortgage financing and contract matters, as well as criminal, personal injury, and business law. My 5 Militia Drive office in Lexington is a bright, 1st floor location with plenty of free parking. Please visit my firm's web site at a http://www.georgefootepc.com; you will find useful information there, such as my "Estate Information Check List" which I recommend all clients use to inventory their investments to get a better picture of what their estate is worth . You can also contact me at [email protected] This is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2012 and I wish you good health, good times, and peace in 2013.

----- George E. Foote, J.D., L.L.M. in Taxation

Season's Greetings from the Law Office of George E. Foote, P.C.

2011


I again take this opportunity to send holiday greetings and to offer estate planning information. In response to a number of inquiries and my observation that this is a point of confusion for people, the topic of this year's newsletter is to examine the differences between Wills and Trusts. Sometimes these terms are used interchangeably, and though similar in function, they can be very different in substance.

A Last Will and Testament will determine what happens to property owned solely by a decedent and must be signed and witnessed according to statutory procedures. It is not enough for an individual's last wishes to be simply notarized. In my 35 years of practice, I have sometimes faced the difficult task of informing families that a Will signed without following legal formalities is invalid. The terms of a Will must be confirmed by a court-supervised process of probating the estate. Wills have no binding effect until the creator of the Will dies, and the Probate Court has "allowed" the Will.

By contrast, Trusts, though often part of an estate plan, are not dependent on the death of the grantor to become effective and are typically created in part, to avoid the probate process. Such Trusts are called "Inter-Vivos", meaning "between/among the living". In essence, a Trust is a set of a "grantor's" written instructions to another person who agrees to be a custodian ("trustee"), of the grantor's property for a "beneficiary". Ownership or title to the assets is transferred to the Trustee, who must follow these written directives.

In some situations, Trusts may have the benefit of minimizing estate taxes. Examples of this include an Irrevocable Life Insurance Trust ("ILIT"), a Qualified Personal Residence Trust ("QPRT") and a Credit Shelter or Marital Trust. A Credit Shelter or Marital Trust is created to minimize estate taxes, but serves another important safeguarding function if both parents die before their child/children are independent. In such a case, a Trust insures that the management of inherited property will remain in the hands of a responsible adult until the grantor's child/children reach a more mature age as designated by the grantor. Without a Trust in place, children who inherit directly gain control of their legacy at age 18.

Trusts also address other non-tax needs. Disabled beneficiaries receiving governmental assistance may lose those benefits if they receive an outright inheritance. I have prepared " Supplemental Needs Trusts" to prevent such forfeiture. These trusts permit distributions for a disabled beneficiary's "extras" but not for basic necessities (i.e. food, shelter and clothing) which are paid by government benefits. Such trusts permit and can provide for significant non-covered medical expenses such as special counseling and therapies.

Describing these various Trust arrangements points out that there are many options that can make inheritance easier on those who depend on us and for whom we want to provide a meaningful legacy. Every situation is different. This is why personal, patient and knowledgeable planning is called for. In addition to my Master's degree in tax law, I offer many years of experience and a commitment to articulate clients' wishes consistent with ever changing estate laws, both at the state and federal levels.

My law practice continues to grow in the areas of estate administration and settlement, estate planning, taxation, and estate administration. I also represent clients in all types of real estate transactions, mortgage financing and contract matters, as well as criminal, personal injury, and business law. My office at 5 Militia Drive in Lexington is a bright, first floor location with plenty of free parking. I invite you to visit my firm's updated web site at http://www.georgefootepc.com ; you can also contact me electronically. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2010 and I wish you and yours good health, good times, and peace in 2011.

2010

I again take this opportunity to send holiday greetings and to offer estate planning information.

A concern I often hear from people in my estate planning and real estate practice is how will their children be able to afford homes. I would like to identify several strategies to address this worry. Adventurous buyers might consider bargain hunting among bank-owned properties. In this case, be aware that homes must be habitable before a new mortgage will be granted. Necessary repairs need to be completed before the mortgage appraiser clears the property for financing. "Short sales", i.e. sales of homes by their owners under threat of foreclosure, are usually sold at a discount. The stumbling block for short sales is that the process takes months to finalize, as it requires a mutual agreement among the buyer, seller, and the seller's existing mortgage bank.

The good news is that there are new tax incentives to help make homes more affordable. In 2009, Congress created the First Time Home Buyer's Refundable Tax Credit. This law provides a government rebate to first time home buyers, whether or not they have taxable income. The tax rebate to the buyer is 10% of the cost of the home, up to a maximum of $8,000. Originally set to expire November 30, 2009, this refundable tax credit has just been extended for homes purchased before July, 2010, with a purchase & sale agreement signed by April 30, 2010. A new section of the law now gives a reduced credit of up to $6,500 to all home owners as long as they have owned their current home for at least 5 years. Income limits for qualifying buyers have been increased. Single buyers with incomes up to $125,000 and married couples - with incomes ­ up to $225,000 may receive the maximum tax credit. The credit is permanent unless the new home is sold within 5 years. This last restriction was apparently designed to prevent speculators or developers from qualifying for this tax incentive provision.

It is often said that "timing is everything". In keeping with this, families may also consider maximizing assistance to their children by making outright monetary gifts to them before this refundable tax credit expires next year. As of 2009, the annual gift tax exclusion for gifts has increased to $13,000 per person. Another relevant tax code provision exempts I.R.A.s and Roth I.R.A.s from the 10% penalty on $10,000 of "early distributions" put toward the purchase of a child or grandchild's first home. The tax credit, plus a financial gift, may make a home purchase possible

My law practice continues to grow in the areas of estate administration and settlement, estate planning, taxation, and estate administration. Please be aware that the proposed Obama tax plan freezes the estate tax threshold at $3.5 million, which may call for changes in estate plans. I also represent clients in all types of real estate transactions, mortgage financing and contract matters, as well as criminal, personal injury, and business law. My office at 5 Militia Drive in Lexington is a bright, attractive, first floor location with plenty of free parking. I invite you to visit my firm's updated web site at http://www.georgefootepc.com/ You can also contact me electronically. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few advertisements I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2009 and I wish you and yours good health, good times, and peace in 2010.

2009

As we look toward 2009, I am pleased to write to you to send holiday greetings and also to offer estate planning information.

In recent years, my office has, with increasing frequency, been retained to assist clients in settling the estate of a deceased loved one. Sadly, long nurtured rancor between relatives can sometimes erupt into this litigation. Like wars between hostile nations, litigation between family members wreaks similar havoc. These conflicts usually stem from deep-seated resentments. Litigation is always expensive and time-consuming, and these types of cases are especially difficult to settle without trial. In spite of the high emotional and financial costs, greed and arrogance drives some people to be aggressively dishonest in dealing with a relative's estate. Despite the burdens of litigation, there is a high emotional cost to ignoring such wrongdoing

Cases of actual fraud and trickery are less common than what is known as the exercise of "undue influence" over a susceptible elder. The law defines "undue influence" as a "form of compulsion that coerces or pressures a person into doing something that the individual does not want to do or that destroys an individual's free will so that he or she acts contrary to his or her own wishes". Elders suffering from dementia are clearly more susceptible to undue influence and can become targets of relatives who may feel entitled to a disproportionate share of the estate; as more elders' mental faculties deteriorate, they can become targets for financial abuse On the other hand, there is a risk that intra-family mistrust can give rise to wild accusations against those in charge who may not be dishonest, so suspicions are not always valid. Ironically, when elders who are also family leaders lose their faculties, it presents additional difficulties. When people have become accustomed to dispensing advice and guidance find themselves in a dependent position, it can be difficult to let go of their leadership role Prudent estate planning should include a durable power of attorney appointing someone fair-minded and trustworthy before mental abilities are compromised.

Holding an elder's power of attorney carries responsibilities, and can sometimes invite suspicion and mistrust toward the appointee of an elder's power of attorney, who becomes a "fiduciary." Fiduciaries cannot legally perform any act in that role that would favor themselves at the expense of the elder. In fact, if a "fiduciary" is accused of undue influence, they face the heightened legal burden of proving the absence of wrongdoing. This principle, in the cases I have litigated, has been a formidable legal weapon against the dishonest fiduciary, making him or her a greater target of such lawsuits. The best defense against this increased liability is, of course, full disclosure of information and periodic consultation among all interested parties. It can also be helpful to document an elder's medical condition when they authorize potentially controversial changes in their estate plan. Thoughtful estate planning can cut short potential disputes before they can fester. If hostilities are open, raging, and beyond healing by simple discussion, then it is time to seek the shelter of competent legal advice.

My law practice continues to grow in the areas of estate administration & settlement, estate planning, tax planning, and estate administration. The Obama tax plan proposes a freeze of the estate tax threshold at $3.5 million, which may warrant changes in estate plans. I also represent clients in all types of real estate transactions, contract matters, as well as criminal, personal injury, and business law. I am well settled in my office location at 5 Militia Drive in Lexington, in a bright, attractive, first floor location with plenty of free parking. I have updated my firm's web site, http://www.georgefootepc.com/ ; I invite you to visit it, or contact me electronically. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2008 and I wish you and yours good health, good times, and peace in 2009.

2008

As we look toward 2008, I am pleased to write to you to send holiday greetings and to offer estate planning suggestions.

Frequently, clients who have lost a loved one, consult me about the required steps to settle an estate. After a brief conference, I will almost always be able to assure clients that they can devote their energies to the funeral, burial and mourning, and meet with me at a later date. If the decedent owned a business or volatile investments, more immediate legal steps may be required. In all cases, a well organized folder with a completed Estate Checklist, such as the one I am suggesting here, can minimize survivors' anxieties.

The settlement of a decedent's estate will primarily concern the assets and property of the deceased and assuring that survivors receive proper allocations, and that taxes and debts are resolved. Accurate information about the decedent's property and investments is a prerequisite to completing this process.

Where to start? A significant source of information is the most recent tax return. Survivors might find that it leads to finding year-end statements of investment accounts. While life insurance policies and other insurance documents are not usually taxable investments (and thus not listed in the form 1040), I have found insurance papers are often kept by clients together with tax returns. Survivors' anxieties, caused by searching for documents, can easily be avoided with some simple steps. At a basic level, even designating a drawer or cabinet for such documents and making family members aware can be helpful. Ideally, however, the "throwing everything into a shoe box" method will not keep financial documents, records, or other materials organized or updated. I recommend completing a check list which itemizes assets, insurance, loans, and basic vital statistics, and updating the information on an annual basis. By drawing upon models I have seen over my years in my practice, I have developed an Estate Checklist, which I can share with clients upon request.

In addition to completing the checklist form, I recommend storing it along with a copy of the most recent tax return, a copy of your Will, Trust, Living Will, Health Care Proxy and Durable Power of Attorney. Consider tax time a good opportunity to review and update this form and accompanying documents. I will close with one piece of related advice. While placing a copy of a Will in a safe deposit box is always sensible, original Wills and Trusts should be stored elsewhere. If the safe deposit box is in the decedent's sole name, it will not be accessible immediately after death, without a court order. A good place to store an original Will would be either at your attorney's office or in the folder containing your completed Estate Checklist.

My law practice continues to grow in the areas of estate administration settlement as well as estate and tax planning. I also represent clients in all real estate transactions, contract law, criminal, personal injury, and business law. I am well settled in my office location at 5 Militia Drive in Lexington. The office is located at a bright, attractive, first floor location with plenty of free parking. My firm's web site is http//www.georgefootepc.com, and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2007 and I wish you and yours good health, good times, and peace in 2008.

2007

I am pleased to write to you during this festive season, to send holiday greetings, to offer estate planning suggestions and to announce that my office has moved to 5 Militia Drive in Lexington. We have a first floor location with plenty of free parking.

The Durable Power of Attorney (DPOA) is a basic estate planning document I draft for clients, and clients often have questions about it. First, it is a lifetime-only document which terminates upon the death of a person granting the DPOA (the "grantor"). By signing any POA, the grantor is designating the recipient of the POA, or "attorney-in-fact" as his or her "agent" to perform the tasks listed in the document. What makes the DPOA "durable" is that it legally stays in effect, even if the grantor becomes mentally disabled.

Once someone becomes mentally disabled, a properly drafted DPOA signed before that person is deemed mentally disabled, can be used for almost every task involving the disabled person's property. Typical tasks covered by the document include the signing of checks, all types of withdrawals from the grantor's accounts, selling and buying of the grantor's property, creating trusts, and making gifts of the grantor's property. In effect, the agent recipient "stands in the shoes" of the grantor. Without a previously signed DPOA, the disabled person has no legal capacity to sign legal documents, including a trust, or a new power of attorney. At that point, the only option for managing a person's property is a Probate Court Guardianship.

Probate Court Guardianships can be expensive and time-consuming. Major transactions involving the "ward's" (i.e. a disabled person under guardianship) property require court approval and a hearing, where "interested parties" (potential heirs) are invited to object. While the process of administering a deceased person's estate in the Probate Court has been streamlined, by contrast, guardianship matters have not, and can be bogged down for many reasons. In addition, the guardian's records of spending and investments of the ward's assets are scrutinized, and such "accounts" are reviewed by the ward's heirs and require approval by the Probate Court. All too often, the ward's assets are depleted by court and attorney fees.

A non-spousal DPOA should be given to a respected and honest family member. Keeping accurate records protects everyone in case motives and actions are questioned. A recipient of a DPOA is a "fiduciary". Fiduciary responsibilities impose a high legal standard of ethical behavior upon the recipient. Before signing a DPOA, potential conflicts and jealousies within the family should be considered. A grantor's written guidelines and intentions can be helpful, but if they are overly specific, they may impinge on a recipient's need for flexibility to deal with unanticipated future contingencies. However, a DPOA does have its limitations. A Will, for example, cannot be signed under authority of a DPOA. Finally, some banks are reluctant to honor a DPOA if it is not "recent". It is good practice for the non-disabled grantor to sign a new DPOA every few years to satisfy restrictive financial institutions.

My practice continues to grow in the areas of estate settlement and estate and tax planning. I also represent clients in all real estate transactions, as well as contract law, criminal, personal injury, and business law. My firm's web site is http//www.georgefootepc.com/; and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2006 and I wish you good health, good times, and peace in 2007.

2006

I am pleased to write to you during this holiday season, to send greetings, and to offer some information about Tax and Estate Planning.

I have often been asked about the crucial role played by an executor of an estate. After all, many of us are nominated to be an executor in a Will, Yet I find that a limited number of people have an adequate grasp of what is required.

A starting point is to keep in mind that an executor is an individual who has a "caretaker" role over all of the decedent's "probate property", which will ultimately be distributed to the beneficiaries. Property subject to "probate" are those assets that at the point of death were owned solely by the decedent. This would include, of course, property that was at one time "jointly held", but one of the joint owners had previously died.

Probate is usually an unfamiliar process to heirs. Parts of the probate process are institutionally arcane and move slowly. Beneficiaries can easily become suspicious and upset even when they have no cause to be since grief over the loss of a loved one can sometimes ignite anger where least expected. In order to assist the executor, my own undertaking as an estate attorney is in part devoted to reducing tensions by careful explanation about the estate process. Attention by the executor to good communications are essential to prevent small misunderstandings from escalating into major conflicts. Left unattended, such emotions sometimes find outlet in an antagonistic attitude toward the person most visibly associated with that death, which is often the executor. Anger and conflicts within a family are often greatly exacerbated by the process of dividing up a deceased family member's estate, and the executor and the seasoned estate attorney need to work as a team to minimize them to get the estate settlement job completed, and avoid becoming a casualty of intrafamily war.

The actual tasks for which the executor is responsible would include the filing of the decedent's final income tax return, the filing of the estate's form 706, or "estate tax"return, the filing of the decedent's last Will, the necessary due diligence to discover the extent of the decedents assets, as will as debts, paying lawful debts and taxes, and ultimately distribution to heirs and beneficiaries.
It is important to note that while the Federal estate tax exemption will increase to $2 million in 2006, the Massachusetts estate tax exemption will top out at $1 million. While the decedent's last Will has jurisdiction over only "probate property", the executor must have complete information about the joint property, life insurance and other "non-probate" property in order to file the estate tax return. Distribution to heirs or even creditors without completely paying all of the estate's tax obligations, subjects the executor for personal liability for such non-payment. In summary, the ability and willingness to keep accurate records, financial acumen, good management skills, as well as, impartiality and communication and mediation skills, are important qualities for a good executor.

My practice continues to grow in the areas of estate settlement and estate planning. I also represent clients in all real estate transactions, as well as contract law, criminal, personal injury, and business law. My firm's new web site is http//www.georgefootepc.com/; and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few "advertisements" I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2005 and I wish you good health, good times, and peace for all of us in 2006.

2005

Although the following information might not be of interest to my broader client base, it does deal with the specific areas of both tax and real estate law, and I thought it might be helpful to a few clients who in the unique position of owning homes which either in a historic district or could be certified (or are already certified) as "historic structures", regardless of the district in which they are located. Here is the "tax tip" which may be helpful:

The Federal Historic Preservation Tax Incentive allows an owner of a historic residence to take a charitable deduction for up to 11% of a building's value for the "donation" of its "façade (e.g. the exterior)" to a charitable trust. Trusts for historic preservation have made the program more available to ordinary taxpayers.

By "donation" I do not mean that you have to share ownership of your residence with some civic organization; you only donate what is, in effect, an "easement" to the historic trust. Such an easement would restrict an owner's ability to make significant changes to the façade. In towns like Lexington, local Historic Boards already impose obstacles to changing the façade of an historic building. Donation of the façade to a qualified Trust will not, practically speaking, diminish an owner's property rights, and the owner will gain a huge tax deduction. In most situations, the donation will neither interfere with refinancing nor cause a reduction in a property's value when the owner decides to sell. Because every property is unique, however, a real estate Broker should be consulted for an opinion whether the donation of a particular property's façade would have a psychological or other impact upon future potential Buyers of the property.

Most of my tax clients are clients of long standing for other legal matters. Occasionally, I find that a few tax clients get the mistaken impression that I deal almost exclusively with income tax returns. While assisting clients with all types of tax matters is a significant area of my practice, I devote the majority of my law practice time dealing with estate settlement, estate planning, real estate transactions, as well as criminal, injury, and business law. My firm's web site is http//www.georgefootepc.com; and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. Thank you.

2004

As always, I am pleased to write to you during this holiday season, to send greetings, and to offer some information about Tax and Estate Planning.

As I reported to you in last years letter, the Massachusetts estate tax rates effectively increased on January 1, 2003. Estates in Massachusetts as of 2003 have a $700,000 exemption compared to a $1 million exemption under Federal tax rules. Next year, the Massachusetts exemption increases to $850,000 and the Federal exemption rises to $1.5 million. Those who have amended their marital trusts (also called credit shelter trusts) during 2003 should be adequately covered if their potential estates are valued above $850,000 and under $1.5 million. I am recommending that any estate plan drafted before the fall of 2002-2003 be reviewed and amended to account for recent changes in the law. Amendments of this nature can usually be drafted at a very reasonable cost to clients.

Clients concerned about nursing home costs and eligibility for Medicaid often consult me about depletion of estates due to potentially catastrophic health care costs. Typically, clients are left with two options; either completely transfer ownership of their home, or purchase Long Term Health Care Insurance ("LTCI"). The purchase of LTCI will exempt the client's home from being sold to reimburse the Commonwealth for Medicaid payments paid during a client's lifetime to a nursing home. This "Medicaid lien" would otherwise effectively prevent a sale of the home by the estate until the State is reimbursed for Medicaid. But LTCI is expensive and only those in excellent health can qualify for the insurance. Until recently, as an alternative to costly LTCI, clients could transfer their homes into a, so-called life estate , which removes a home from their Aprobate estate. Prior to July 1, 2003, the Medicaid lien attached only to the owner's probate estate. Now, the Medicaid lien will attach to property held in a life estate.

Gifting assets to heirs may result in a three-year waiting period for Medicaid eligibility, depending on the amount gifted. The only exception to this waiting period exists where the home is transferred to a sibling or a child who lives with the senior and provides custodial care to the former owner. If the transfer of assets is made to a trust, the waiting period for Medicaid eligibility increases to five years. Massachusetts, like Connecticut, has applied for a Federal waiver to make the asset transfer rules even stricter. Connecticut's application, however, has been pending for two years, so the transfer rules may not change soon, but stay tuned. There are still steps clients can take to protect their estates, but this means retaining less control over their assets (i.e. gifting property to heirs). In summary, clients whose potential estates would be over $850,000 have less to fear from nursing home costs, and should focus instead on optimizing estate tax planning opportunities.

I continue to consult with a growing number of clients in the areas of estate settlement and estate planning. I also represent clients in all real estate transactions, as well as contract law, criminal, personal injury, and business law. My firm's new web site is http//www.georgefootepc.com; and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few advertisements I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2003 and I wish you good health, good times, and peace for all of us in 2004.

2003

As always, I am pleased to write to you during this holiday season, to send greetings, and to offer some information about Tax and Estate Planning.

Despite the much publicized "repeal" of the Federal estate tax, the Massachusetts estate tax will actually increase on January 1. Through 2002, and for the past several years, an estate valued at less than the Federal exemption, would also be exempt from Massachusetts estate tax. Even Federal taxable estates would only pay the "maximum state credit" amount, which would be sent separately to the State, but would be subtracted from the Federal Estate Tax owed. The Federal exemption will remain at $1 million for one more year, then increase in future years, but as of 1/1/03, the Mass. exemption will drop to $700,000.00. While the Federal estate tax exemption is also scheduled to fall back in 2011, a Republican majority in Congress may attempt to enact permanent repeal of the Federal estate tax; this is despite growing budget deficits caused by a slow economy and additional expenses for national security. If only for the Mass. estate tax however, there is still a compelling need for estate tax planning.

Taxes are only a part of estate planning. I am often asked about the wisdom of leaving children unequal shares, thus favoring some beneficiaries over their siblings in a Will or Trust. The "price" of unequal treatment in Wills and Trusts can be resentment which can incite estate litigation filed by those less favored by the decedent, and I have witnessed this result. Estates are quickly depleted by such lawsuits. They can be avoided by careful evaluation of competing personalities among beneficiaries. Unequal treatment of beneficiaries should be attempted with extreme caution.

On the other hand, it is always more prudent to avoid procrastination and make the best choice by weighing all the facts at your disposal. Estate plans can usually be amended at a reasonable cost, if circumstances change. Even a Will which designates an executor and divides an estate equally among survivors provides financial advantage by easing the administration process. It will also give emotional closure to heirs who will know that the decedent cared enough to make even their declaration of equal treatment, rather than leaving things untended.

I continue to consult with a growing number of clients in the areas of estate settlement and estate planning. I also represent clients in all real estate transactions, as well as criminal, injury, and business law. My firm's new web site is http//www.footelawoffice.com ; and I can be contacted by e-mail. If you know someone in need of legal services, I hope you will recommend me to them. This letter is one of the few advertisements I use, as I rely primarily upon recommendations from clients. Thank you for the referrals you have provided in 2002 and I wish you good health, good times, and peace for all of us in 2003.

George E. Foote, J.D., L.L.M. in Taxation