Moschella & Winston, LLP Your Legal Advisor for Life

Did you know that as many as 70 percent of Americans die without a will ⁽¹⁾? If that statistic applies to you and doesn’t scare you, then you haven’t thought about what this means for your loved ones. If you die “intestate,” meaning without a will, you leave it up to the State and the courts to decide how your property and financial assets will be distributed. At that point it will be too late to express your wishes and more importantly, protect your loved ones. You also open the door for a much more complex and lengthy court process, especially if family members disagree with how your assets are being divided. All of this can be avoided with a few essential estate planning documents. (more…)

By Michelle Mulvena, Esq.

A life estate is a type of ownership interest in real estate.  Most commonly the life estate is conferred by deed but may also be conferred in a will or trust.  The typical scenario pertains to a parent who wants to “give the house to the kids” but retain control over the property. The parent transfers the real estate by deed to the children reserving a life estate for him or herself. The parent is known as the “life tenant,” and the children have what is known as a “remainder interest.”

The life estate avoids probate because the real estate goes directly to the children upon the death of the life tenant.  The life estate can also protect the home from Medicaid after the five year look back period imposed by Medicaid.  The life tenant is entitled to any rental income, continues to pay all expenses of the real estate including real estate taxes, homeowners insurance, repairs and the capital gains tax exclusion.  The life estate will qualify for a step up in basis upon the death of the life tenant.

There are some pitfalls.  A life estate is a transfer of the remainder interest to the children.  Thus according to Uncle Sam, it is a gift.  You will need to file a gift tax return for the value of the remainder interest.  Also, if the home is sold during the life of the life tenant, then the children may have to pay capital gains tax.

While the life estate is a simple and often used planning tool, as always, it is best to consult with an estate planning lawyer to ensure that the life estate is right for you.

Michelle Mulvena is an attorney at Moschella & Winston, LLP, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

By Michelle M. Mulvena, Esq.

Happy New Year!  It’s that time of year for reflection and resolution.  Your estate plan is the perfect place to start.  Now is the time to reflect on your planning objectives.

Is your estate plan more than five years old?  Have your assets changed?  Won the lottery?  Perhaps your estate plan was done when the kids were young.  Now they have their own families.  Have there been changes to the law that would impact your planning objectives?

If the answer to any of these questions is yes, you should review your estate plan with an estate planning attorney.

New Tax Relief Law – Is it a Relief?

A few weeks ago Congress passed the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.”  The law is only effective for the next two years, so seize the moment.  Under this law there is a $5 million dollar federal estate tax exemption and a 35% tax rate until the end of 2012.  Yes that’s right I said $5 million.  That means that only estates in excess of $5 million will be taxed at death.  Many of you are thinking “that doesn’t even impact me”.  But wait there’s more . .  . there is also a $5 million federal lifetime gift tax exemption.  Meaning for the next two years you can give away up to $5 million of your estate.  Previously you were capped at $1 million for lifetime gifting.  This change is significant if you own a closely held business and are thinking of passing it along to your kids or if you want to set up that family trust to ensure your kids and grandkids benefit from your years of hard work.

Early planning is like preventive medicine.  Be proactive and make your estate plan a top priority in 2011.

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Michelle Mulvena is an attorney at Moschella & Winston, LLP, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

By Michelle M. Mulvena, Esq.

This is the final segment in a three-part series that discusses the Medicare open enrollment period for Medicare Parts A, B, C and D. Be sure to check out Part I and Part II in the series.

As you know, the Medicare annual open enrollment period began on November 15, 2010 and runs through December 31, 2010. This is the only opportunity you will have to make changes to your Medicare plans for 2011 so it is essential to take advantage of this time frame.

The health care reform act has changed Medicare coverage. Thus it is particularly important to do your homework for your 2011 Medicare coverage.

The changes include:

1. Starting in 2011, Medicare participants will be able to receive preventive services like mammograms and colonoscopies for free.
2. The prescription drug coverage gap known as the “donut hole” will decrease until it is eliminated in 2020. This year, eligible participants who hit the donut hole received a $250 rebate check. Next year, participants will receive a 50 percent discount on the brand name prescription drugs they purchase when they hit the donut hole.
3. Free annual wellness check ups starting in 2011.

Many Medicare plans change or are eliminated every year. But this year there are an exceptional number of plans that will be discontinued. Even those with plans that are continuing should be carefully evaluated to ensure they cover the medications you need and that you can afford the premiums, deductibles and co-pays.

Resources for Medicare Beneficiaries

1. Visit www.medicare.gov. Personalized comparisons of costs and coverage plans available in your area. Multilingual Open Enrollment information and counseling is available.
2. Call 1-800-MEDICARE (1-800-633-4227) for around-the-clock assistance to find out more about coverage options. TTY users should call 1-877-486-2048.
3. Review the 2011 Medicare & You handbook. It is also accessible at www.medicare.gov and has been mailed to the homes of people with Medicare benefits.
4. Contact your local Elder Service Plan (ESP) for free one-on-one assistance. In the Somerville/Cambridge area your local Elder Service Plan is Somerville-Cambridge Elder Services, 61 Medford Street, Somerville, MA 02143-3429, 617-628-2601.
5. Get one-on-one counseling assistance from the local State Health Insurance Assistance Program (SHIP). Local SHIP contact information can be found:

• At http://www.medicare.gov/contacts/organization-search-criteria.asp
• On the back of the 2011 Medicare & You handbook or;
• By calling Medicare at 1-800-MEDICARE (1-800-633-4227; TTY, 1-877-486-2048)
• Through a listing of national stand-alone prescription drug plans and state specific fact sheets can be found at: http://www.cms.hhs.gov/center/openenrollment.asp

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Michelle Mulvena is an attorney at Moschella & Winston, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

By Michelle M. Mulvena, Esq.

This is the second posting in a three part series that discusses the Medicare open enrollment period for Medicare Parts A, B, C and D. Check out the first part here.

As you know, the Medicare annual open enrollment period began on November 15, 2010 and runs through December 31, 2010. This is the only opportunity you will have to make changes to your Medicare plans for 2011 so it is essential to take advantage of this time frame.

Medicare benefits are split into four parts:

1. Part A covers hospitalization and other in-patient care.
2. Part B covers services and treatment such as doctor visits.
3. Part C is known as the Medicare Advantage plan, which includes Part A and Part B as well as extra benefits.
4. Part D is the prescription drug plan.

Beneficiaries choose either original Medicare (A and B) or the advantage plan, and can then elect to add Part D. If the beneficiary needs services not covered by these plans, they can select a Medigap plan.

Participants of Part C, Medicare Advantage, get government-provided Medicare through a private insurance company, in the form of a health maintenance organization or a preferred provider organization. It usually includes the elements of Part A and Part B hospitalization, medical care and a prescription drug plan, and often comes with extras, such as covered annual physicals.

Medicare Advantage includes specialized care for people who need a large amount of health care services. In addition participants are covered for emergency or urgent care services when traveling outside of their plan coverage area.

For Medicare Advantage participants it is especially important to pick the right plan during the open enrollment period. Unlike previous years, people enrolled in Medicare Advantage plans can no longer switch to other Medicare Advantage plans during January, February and March. However, after January 1, 2011, participants can still leave their Advantage plan and go back to original Medicare.

Right now there is a lot of information circulating out there about the open enrollment period. Buyer beware of Medicare scams and take precautions to protect your Medicare number as diligently as you would protect your social security number. Identity theft and fraud targeting seniors is in full force this time of year. Make sure you are receiving information from trusted sites such as Medicare.gov or from your local Senior Center or Elder Service Plan.

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Michelle Mulvena is an attorney at Moschella & Winston, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

Medicare Open Enrollment

By Michelle M. Mulvena, Esq.

Earlier this year I posted a blog describing the status of the federal estate tax law for 2010.  I fully anticipated that by now I would be updating you as to the new estate tax law, but alas that is not to be.  Congress has yet to take any action on the matter.  As of this posting, the current federal estate tax law will ride off into the sunset on December 31, 2010.  It will be replaced with a $1 million exemption level with a tax rate of 55% – yes, that’s 55%!

There is considerable debate as to whether Congress will take any action before the end of the year as we enter a lame duck session after the November elections. I suspect that Congress will not change the estate tax law before the end of the year. In fact, I’m going to wager a guess that the law may not even change in 2011 or if it does, it will be well into 2011.  Could Congress change the law late in 2011 and make it retroactive to January 1, 2011?  Sure and that will make things very interesting.

So for now prepare yourselves for the worst-case scenario because if the federal law does not change many estates will be impacted.  The person owning a multifamily in Somerville and a decent size investment portfolio needs to be concerned.  The person who owns a home in Winchester and a vacation home on the Cape needs to be concerned.  Have your estate plans reviewed now to try to minimize the risk.

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Michelle Mulvena is an attorney at Moschella & Winston, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

A few months ago there was an article in the AARP Bulletin that discussed a growing trend of nursing home residents regaining their independence and transferring back into the community. This trend is gaining momentum partly because more state and federal programs are designed to help them do it.  According to the National Center for Assisted Living, spending for home and community-based care rose 81.5% between 2001 and 2007, while Medicaid spending for nursing home care rose only 9.8%.  There is a federal program that encourages states to use Medicaid funds to transition nursing home residents to independence.  This program received a five-year, $2 billion extension in the health care reform bill.

Nursing home residents who are receiving Medicaid can usually transition that assistance to help in the home.  The transition from nursing home to independence is not an easy road and many factors must be considered before the transition can occur.  You should inquire with your local elder service plan, such as Mystic Valley Elder Services or Somerville-Cambridge Elder Services, or your local Council on Aging to see whether they can offer any assistance with the transition.  The transition may require getting new identification cards, setting up bank accounts and finding suitable living arrangements, as well as care in the home.

The most important consideration is whether the senior can receive the level of care and services needed to move into the community.

Consider the following when determining whether a senior should return to the community:

• Do you want to live independently?

A senior must be motivated to overcome the obstacles to independent living.

• Can you physically and safely live on your own?

Mobility is a key element of independence.

• Can you afford to live outside of a nursing home?

Various funding options may be available in addition to Social Security and pension income.

• Is in-home care available?

Community based Medicaid programs may provide considerable assistance.

• Can you find appropriate housing?

Issues such as access, safety features, security, kitchen or dining facilities should be considered and vary with health and mobility.

• Does the home have everything that you need?

You will need items such as emergency contacts, a telephone, kitchen equipment, and personal care items.

• Does your community have necessary medical services?

It is critical to identify this in advance, and if possible, contact providers in the community to ensure that services are available.

• Do you have the skills needed to live at home independently?

This may include everything from preparing meals, shopping and paying bills, to showering or bathing.

• Do you have transportation available?

Many communities have transportation programs for seniors.

• Do you have social support?

Senior day care, activities in senior housing, Council on Aging programs, religious programs, and visits from family can prevent isolation if returning to the community.

Transitioning from a nursing home to the community may be a viable option for some seniors.  The key is to assess the current situation and potential options, research available support, anticipate unexpected circumstances, and plan well in advance of a move.

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Michelle Mulvena is an attorney at Moschella & Winston, a law firm specializing in legal planning and protection for individuals and families for over 30 years. She is also host of the Somerville Cable TV show, “Legally Speaking with Michelle Mulvena.” Please contact her at mm@moschellawinston.com or (617) 776-3300.

For the eighth year, Moschella & Winston, LLP is on the MOVE to end Alzheimer’s.  We’re helping to raise awareness of Alzheimer’s disease by participating in the 2010 Greater Boston Memory Walk. This walk is the Alzheimer’s Association’s signature fundraising event and all donations go toward care, support, and research for the disease.

The walk is being held Sunday, September 26th, 2010 from 9:00 a.m. to 12:00 p.m. at Canal Park at the CambridgeSide Galleria, Cambridge.

Facts & Information:

• More than 5.3 million people in the United States are living with Alzheimer’s
• Alzheimer’s and dementia triple healthcare costs for Americans age 65 and older
• Every 70 seconds, someone develops Alzheimer’s
• Alzheimer’s is the seventh-leading cause of death
• The direct and indirect costs of Alzheimer’s and other dementias to Medicare, Medicaid and businesses amount to more than $148 billion each year
• The Alzheimer’s Association is the world leader in Alzheimer research and support

The facts listed above are staggering; that is why Moschella & Winston is on the move to end Alzheimer’s! If you would like to donate or walk with us, please contact our office at (617) 776-3300 or visit our team page.

For more information on Alzheimer’s disease, please visit www.alz.org.

On Thursday, September 2, 2010, from 5-7PM, join Moschella & Winston at the  Somerville Chamber of Commerce Business After Hours, a networking event for local businesses and professionals.

Somerville Chamber of Commerce Business After Hours

Business After Hours

at Olde Magoun’s Saloon

518 Medford Street, Magoun Square

No cover

Free appetizers

Excellent networking

Free business card drawing

Cash bar

Sponsored by Moschella & Winston and hosted by After Hours Chair Michelle Mulvena of Moschella & Winston.