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Day 1: The "Funding" Fiasco
Your Trust Is Like That Gym Membership You Never Use Hello! I'm Joel Bernstein, your guide through Massachusetts revocable living trusts. Let's make estate planning both useful AND bearable. Today's Fact: An empty trust is like an empty promise - technically exists, but utterly useless. I've seen countless clients proudly show me their trust documents only to discover they never transferred any assets INTO the trust. Real-life example: Last year, a client's father created a trust with a prestigious Boston firm. When he passed, the family found his $750,000 investment account, Cape Cod vacation home, and vintage car collection all in his individual name. Everything went through probate, costing an additional $22,000 in legal fees and delaying distribution by 14 months. Massachusetts doesn't offer automatic funding mechanisms. Each asset must be manually transferred into the trust. That beautiful document? Just expensive paperwork until you fund it. Action Step: List your three largest assets. Have you formally transferred them into your trust? Tomorrow: A peculiar Massachusetts quirk about homestead protections that trips up even veteran attorneys. Until then, Joel Bernstein Day 2: The Homestead Protection Paradox How Your Trust Might Accidentally Leave You Homeless (It Probably Won't) Welcome back! Today we're diving into something that once made me look completely clueless in front of a knowledgeable client. Today's Fact: In Massachusetts, putting your home in a revocable living trust invalidates your homestead protection... unless you take one specific step. Massachusetts homestead protection (M.G.L. ch. 188) shields up to $1,00,000 of your primary residence's equity from creditors. The problem: When you transfer your home into your trust, you technically no longer own it as an individual. The trust does. And trusts don't qualify for homestead protection... ...unless you specifically file a declaration of homestead as the trustee of your revocable trust - a Massachusetts-specific procedure many attorneys miss. Real-life example: A Brookline couple transferred their $1.2 million home into their trust. Two years later, when creditors came after the husband's assets following a business lawsuit, they discovered their homestead protection had vanished because they never filed the trustee declaration of homestead. They could have protected $1,000,000 of equity with a simple one-page form costing $35. Action Step: If your home is in your trust, check if you've filed a trustee declaration of homestead. Tomorrow: Why your Massachusetts trust absolutely needs a pour-over will. Stay tuned, Joel Bernstein Day 3: The Pour-Over Will Safety Net Why Your Trust Needs a Backup Plan Hello again! Today we're discussing something that's saved my professional reputation multiple times: the pour-over will. Today's Fact: In Massachusetts, a revocable living trust without a pour-over will is like a swimming pool with no way to fill it. Scenario: You create a trust but forget to transfer some assets into it (I once forgot my own checking account, and I do this for a living). Then you pass away with those assets still in your individual name. Without a pour-over will, those assets go through probate according to Massachusetts intestacy laws, potentially to unintended beneficiaries. The pour-over will catches these assets and directs them to your trust. Real-life example: A Newton client had a trust directing all assets to his three children equally. He received a surprise $175,000 inheritance just before his unexpected passing. Without his pour-over will, Massachusetts intestacy laws would have directed half to his new spouse of one year and half split among his children - contrary to his wishes. Massachusetts probate courts are strict about will execution: Two disinterested witnesses must be present simultaneously when you sign. Action Step: Verify you have a properly executed pour-over will complementing your trust. Tomorrow: Why Massachusetts trustee investment powers are surprisingly restrictive. Trust-fully yours, Joel Bernstein Day 4: The Investment Powers Limitation Why Your Trust Might Be More Conservative Than Your Grandmother Welcome to Day 4! Today's topic: trustee investment powers under Massachusetts law - boring but potentially costly. Today's Fact: Without specific language, Massachusetts trustees have surprisingly limited investment powers. Massachusetts follows the "Prudent Investor Rule" for trustees, but our courts interpret it conservatively. Without expanded powers in your trust, a Massachusetts trustee may be restricted from:
Real-life example: A Worcester entrepreneur left his trust with 70% of assets in his company's stock. After his passing, the trustee had to sell most shares during a market downturn due to the prudent investor rule's diversification requirement. The result: capital gains taxes plus poor timing, costing the family $245,000. A simple expanded powers clause would have prevented this. This matters particularly for trusts that continue holding assets for beneficiaries after your death. Action Step: Review your trust's investment powers section. If it simply references the "prudent investor rule" without expanded powers, consider an update. Tomorrow: The biggest Medicaid planning misconception about revocable trusts. Joel Bernstein Day 5: The Medicaid Misconception Why Your "Asset Protection" Trust Might Not Protect Anything Hello for the final time! You're now in the top 1% of Massachusetts trust enthusiasts. That and $5 gets you coffee at any overpriced Boston café. Today's Fact: In Massachusetts, your revocable living trust offers zero protection from Medicaid estate recovery - despite what your neighbor might claim. The persistent myth: Placing assets in a revocable trust protects them from Medicaid when paying for long-term care. In Massachusetts, this is false. The Massachusetts Division of Medical Assistance considers all assets in your revocable trust fully available when determining Medicaid eligibility and subject to estate recovery after death. Real-life example: An elderly Springfield couple placed their $425,000 home and $180,000 in investments into a revocable trust after a "free lunch" seminar implied this would protect their assets. When the husband needed nursing home care, they were denied MassHealth coverage because their trust assets exceeded the $2,000 limit. They had to spend down nearly everything before qualifying - exactly what they hoped to avoid. For Medicaid planning, you need different tools - typically an irrevocable trust that complies with the 5-year lookback period. Action Step: If someone told you your revocable trust provides Medicaid protection, consult with a Massachusetts elder law attorney. Thank you for joining this journey through the obscure corners of Massachusetts trust law! Estate-planningly yours, Joel Bernstein |
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