Question:         I want to deed my house to my adult children and reserve a life estate. I am nervous that something may change with my kids in the future. What can I do if I want to change my mind, later.
 
Answer:           A life estate deed is a good tool for general estate planning, probate avoidance and Masshealth/nursing home planning. Make sure to review the pros and cons with an estate planning lawyer, as there may be a tax effect if you sell in the future. Beyond that, if you are moving forward with the life estate deed, let's talk about how to preserve flexibility.
 
Special language can be added to your deed where you reserve the right to change your mind.  The special clause is called a “power of appointment”.  In fact, a recent Massachusetts appeals court decision supports the use of these special clauses. Here are the facts of the case:
 
An elderly mother executed a deed to her three daughters, reserving a life estate to herself. This gave her the right to live at the home for the rest of her days. She reserved a special power of appointment, allowing her to change the people who will inherit her property.
 
Three years later, she reduced one of her daughters ownership interest from 33% to only 5%. After the woman died, the diminished daughter challenge the deed, arguing that mom “couldn't give her something and later take it away”.
 
The daughter lost at trial and appealed. The court supported the mother’s use of a power of appointment stating that” she granted something less than a full remainder interest”.  The Court continued, “ the reservation of the power of appointment resulted in a grant of a lesser estate… the daughter’s interest was in the nature of fee simple defeasible”. 
 
The decision clarifies and supports the ability for a senior citizen to gain the benefit of a life estate deed, but also reserve the right to change his or her mind.  By keeping such power, the parent remains in the drivers seat, in the relationship. The children still need to behave, in order to receive their inheritance.
 
Attorney James Haroutunian practices real-estate law, estate planning and probate at 630 Boston Road, Billerica. He gladly invites questions at james@hlawoffice.com or by phone at 978-671-0711. His website blog is found at www.hlawoffice.com.  This column is published for informational purposes only and not to be relied on as legal advice, in any manner. 

Question:         My home has a septic system.  If I sold it on the market, I would need to fix the system to pass a Title V inspection.  But, if I sell to my Son, does Title V still apply?
 
Answer:           Title V is a state law that regulates the condition of septic systems.  The responsibility lies with a home seller to repair a deficient septic system, prior to a sale.  Such repairs can cost over ten thousand dollars.  However, does the regulation apply to inter-family transfers?  No.
 
Fortunately, a seller won’t incur the cost of repairing a septic system of a home for the following transactions: 
1. between current spouses;
2. between parents and their children;
3. between full siblings; and
4. where the grantor transfers the real property to be held in a revocable or irrevocable trust, where at least one of the designated beneficiaries is of the first degree of relationship to the grantor.
 
Attorney James Haroutunian practices real-estate law, estate planning and probate at 630 Boston Road, Billerica. He gladly invites questions at james@hlawoffice.com or by phone at 978-671-0711. His website blog is found at www.hlawoffice.com.  This column is published for informational purposes only and not to be relied on as legal advice, in any manner.  
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Some call it a scam.  A company calling itself “Massachusetts Corporate Compliance” recently mailed solicitations entitled “Annual Corporate Minutes Compliance Filing” to many Massachusetts corporations. This company offers to complete corporate meeting minutes on behalf of the corporation for a fee. Despite the implications contained in the solicitation, Massachusetts corporations are not required by law to file corporate minutes with the Secretary of State.
Based upon phone calls this office has received, it is apparent that many citizens are confused by Massachusetts Corporate Compliance’s solicitation.
First, the solicitations are presented in a format similar to forms promulgated and distributed by the Office of the Secretary of State and references a $125 “Annual Fee”, the exact amount of the fee for filing an annual report with the Office. Second, the solicitation includes a corporation number. Third, the solicitations contain a limited response time. Although the solicitation contains a disclaimer stating that Massachusetts Corporate Compliance is not affiliated with any government agency, many customers may misinterpret the official-looking documents.
You do not have to do business with Massachusetts Corporate Compliance. The forms provided by them are not required by the Office of the Secretary of State. Whether you choose to do business with Massachusetts Corporate Compliance will in no way affect your corporate filing with the Secretary of State, either positively or negatively.
It is important to remember that any official statement or request from the Office of the Secretary of State will clearly indicate its origin by displaying the name of Secretary of State William Francis Galvin.

​Attorney James Haroutunian practices estate planning, business and real estate law in Billerica at 630 Boston Road.  Contact him to begin an estate plan or with questions at 978-671-0711 or email him at james@hlawoffice.com.
 

Last week, senior citizens rejoiced at a landmark Mass. Supreme Judicial Court case decision.  MassHealth, argued against two seniors who applied for long term care coverage.  The applicants each owned assets in a special irrevocable trust designed for nursing home protection.  Under the agency’s regulations, assets owned under an irrevocable trust are not countable, as long as the principal of the trust assets was unavailable to the applicant.  The concept of an asset’s “availability” was scrutinized at length in the case. 
MassHealth argued the seniors retained rights to live in the home, previously conveyed to the irrevocable trust.  Thus, MassHealth claimed the home was “available” to the applicants, and should be counted as an asset subject to a lien.  The seniors, and many industry groups, argued using traditional trust and property law concepts.  In the end, the court agreed that “availability” of a trust asset’s principal related strictly to the trustee’s ability to distribute trust principal.  The concept related to ownership vs. use of a trust asset. 
These seniors did the estate planning work.  They obtained the trusts authorized by the MassHealth regulations.  Unfortunately, these seniors had to fight the agency, all the way to the Commonwealth’s highest Court, just to prove they protected their homes.  This victory, however, benefits all applicants who own their homes under an irrevocable trust. 

Attorney James Haroutunian practices real-estate law, estate planning and probate at 630 Boston Road, Billerica. He gladly invites questions at james@hlawoffice.com or by phone at 978-671-0711. His website blog is found at www.hlawoffice.com.  This column is published for informational purposes only and not to be relied on as legal advice, in any manner.  
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