The law, known as HIPAA, generally prevents health care providers from disclosing your personal medical information to anyone but you and someone you’ve named as your “personal representative.”

Medical privacy may be a good thing – but the law can create complications.

For instance, you may have a health care proxy that names someone you want to make medical decisions for you if you’re not able to make them yourself. But if you haven’t also named that person as your “personal representative” under HIPAA, then he or she might not be able to access your medical information in order to make informed decisions.

Here’s another problem: Many power of attorney documents say that your agent can act on your behalf if you become incapacitated. But if your agent isn’t also your personal representative under HIPAA, then even if you do become incapacitated, your agent might not be able to access your medical records in order to prove it – and as a result, the power of attorney might be of little value.

To make sure your agent doesn’t get caught in this “Catch-22,” your power of attorney and health care proxy documents should contain HIPAA clauses saying that the agent is also your personal representative. In some cases, it might also be good to sign separate HIPAA release forms.

Here’s another issue: When people are admitted to a hospital, the hospital often asks them to fill out a generic health care proxy form. A lot of people dutifully fill out this form as part of the hospital paperwork. But if you do so, it could revoke the more carefully considered form you created as part of your estate plan. You’ll want to be careful to make sure that the form you create as part of your estate plan is the most current form and the one on which the hospital will rely.

We’d be happy to help you make sure that these important documents are fully up-to-date.

It’s true that pets can cause damage to a building, but it’s also true that there’s a growing demand for pet-friendly environments, and allowing pets can make a rental property much more attractive.

Some 17 percent of businesses across the U.S. now allow pets at work, according to one recent survey. Most of these are small businesses and traditional stores – such as a bookstore with a cat – but many large companies such as Google and Apple now allow pets in offices, and other businesses are following suit.

If you’re a landlord (or a tenant) and you want to have a pet policy, it’s best to spell things out in the lease. For instance, the lease might specify what types of animals are allowed, and require that all pets be healthy, vaccinated, housebroken and well-socialized. A lease might also require that pets be kept on a leash in any common areas. A landlord might want to set aside certain common areas as pet-free zones.

While pets can cause damage to a building, there’s a growing demand for pet-friendly environments, and allowing pets can make a rental property much more attractive to prospective tenants.

Both landlords and tenants will want to make sure that their insurance policies cover dog bites.

Landlords might want the lease to specify that the tenant will be responsible for any damage caused by a pet. They might also want to insist on a larger security deposit from tenants with pets.

Although both children and pets can cause damage to an apartment, it’s against the law for a landlord to ask for a larger security deposit from tenants with children – because this would be discrimination based on family status, which is prohibited by the federal Fair Housing Act. However, there’s no law against asking for a larger security deposit from tenants with pets.

Our real estate lawyers and landlord tenant attorneys are located in Malden, Massachusetts and serve the entire Greater Boston North Shore region including the communities of Everett, Revere, Chelsea, Somerville, Cambridge, Medford, Arlington, Winchester, Woburn, Burlington, Stoneham, Melrose, Wakefield, Saugus, Lynn, Peabody, Salem, Marblehead, and Swampscott. Our lawyers speak and provide legal services in Spanish and Italian.

Presented by Scott Shutte

Although the painful recession may be in our rearview mirror, the aftermath may have you concerned that you won’t have enough money to retire when the time comes. But you can still take control of your retirement, despite market declines and an uncertain economic climate. It all boils down to having a plan—and sticking to it.

Creating a checklist can help improve your chances of attaining retirement readiness. Here are five key steps that can help you jump-start your planning or get you back on track. And, remember, when you participate in your workplace retirement plan, you’ve already taken a step in the right direction.

By following each of these steps, you will be that much closer to having a solid retirement plan that you can stick to. It’s also a good idea to consult a financial advisor about your situation. I want to hear from you about future topics that will appear in this publication. Please email with any financial planning or investment managing topics that concern you

In general, you can give $13,000 a year to anyone you like without having to pay gift tax, and you can make additional gifts over this limit, over the course of your lifetime, up to the amount of your gift tax exemption (although these larger gifts will reduce your estate’s exemption when you eventually pass away). Plus, you can give an unlimited amount to a spouse or charity.

One problem with making gifts for tax purposes is that some types of assets are hard to value. In particular, certain types of real estate, interests in a partnership, and stock in a family-owned business can be very difficult things on which to place a price tag.

You can obtain an independent appraisal of the assets’ value, but some people worry that even if they do, the IRS might disagree with the appraisal. They are concerned that the IRS will say the assets are worth more than they thought, and claim that the gifts were “over the limit” such that they have to pay gift tax.

Recently, a woman named Anne Petter came up with a solution to this problem and beat the IRS.

One taxpayer found a way to avoid the gift tax even though the IRS said she had given away too many assets and was “over the limit.”

Anne owned membership units in a family LLC. She gave some of the units to two family trusts. An appraiser valued these units at an amount equal to Anne’s lifetime gift tax exemption. Anne also donated some units to charity. As part of the transfer to the trusts, she required that if the IRS appraised the units at a higher value, the trusts would have to give the difference to the charity.

The IRS did indeed appraise the units at a higher value, and it demanded that Anne pay $2.1 million in gift taxes.

But a federal appeals court in San Francisco sided with Anne. It said that no matter what value the IRS placed on the gift, as long as the trusts had to give any additional amount to the charity, Anne wasn’t “over the limit” and didn’t have to pay the gift tax.

Our Massachusetts estate planning attorneys concentrate in estate planning matters and serve the Greater Boston and Boston’s North Shore region including the communities of Everett, Revere, Chelsea, Somerville, Cambridge, Medford, Arlington, Winchester, Woburn, Burlington, Stoneham, Melrose, Wakefield, Saugus, Lynn, Peabody, Salem, Marblehead, Swampscott, Middlesex County and Essex County, Massachusetts.

As with much in the law, it depends. Generally, though, Bob would be responsible if he knew the tree was in danger of causing damage to Janet’s property, or if a reasonable person in his position would have noticed the danger. For instance, Bob might be responsible if the tree was dead or dying and was leaning precariously over Janet’s driveway, or if Janet had complained to him previously that tree limbs were falling onto her parking space.

On the other hand, if the tree appeared healthy, and it was a total surprise that a hurricane or tornado blew it some distance onto Janet’s yard, Bob probably wouldn’t be liable.

In any event, Janet’s first step should probably be to file a claim with her insurance company.

If you’re a property owner, it’s a good idea to check your trees periodically to see if any of them poses a danger. Falling trees can cause serious personal injuries that are a lot more expensive than a car repair.

If you feel that a neighbor’s trees are a danger to you, and your neighbor won’t do anything about the problem, you have a number of legal options. You might be able to report the dangerous condition to the city, or to a utility company (if the tree is endangering utility equipment), or possibly sue the neighbor for allowing a nuisance. You might also be able to trim the part of the tree that overhangs your property, although you’re generally not allowed to trim the part that’s on your neighbor’s property.

BOSTON (CBS) – Everyone wants to go to Heaven, but nobody wants to die to get there! | Estate Planning Article

We are on a roll. It’s time to review your estate planning. How long ago was it that you did your estate planning? Have you even done any estate planning? Over 50% of our listeners are going around naked, unprotected. They’ve not done any estate planning.

If you haven’t done anything, think about starting with a simple plan. I hear such excuses as “we don’t have enough money to warrant a will”. “We own everything jointly so we don’t need a will.”

Do you have kids? Who would you want to care for your kids? Do you have stuff you want to go to friends or family?

An estate plan helps to distribute your assets upon your death and it can do more. If you have kids you can name a guardian who will take care of your children if both you and your spouse should die. All you may need is a simple will, but if your life and finances are complicated then your estate planning should also be complicated.

And if you did do some estate planning a long time ago, find those documents and review them. Both the Federal and Massachusetts estate tax laws have changed so you probably need to update your documents because of the new laws. You want to review your estate planning documents when there are any major life changes, such as a marriage, birth, death, divorce or a move to another state.

Your estate planning, whether it be simple or complicated, should include a Durable Power of Attorney. A power of attorney is used while you are alive. It allows you to choose someone, your attorney in fact, to act on your behalf legally or financially when you are unable to. This document is very powerful for someone could have access to your money and assets.

The next document you should be considering is a Health Care Proxy. This is Massachusetts’ version of a medical directive. This also is a powerful document and you should choose wisely who you ask to take on the job of being your proxy. Here you choose someone to make medical decisions for you if you are incapable of making those decisions.

Log onto www.healthcareproxy.org, which is on the Massachusetts Medical Society’s webpage and you can download a copy of the Massachusetts Health Care Proxy form. You will need to have two people witness your signature for it to be a legal document. But that’s easy to do, ask your next door neighbors.

Keep copies of your legal documents accessible and a copy should be at your attorney’s office in a safe and secure place.

New construction has a lot of advantages – but it can also be more complicated, and there are some potential trouble spots as well. You should definitely speak with your real estate attorney before you sign anything in order to make sure you’re protected.

There are three big advantages to new construction:

One, everything’s new! You get to enjoy a brand-new kitchen, brand-new bathrooms, brand-new appliances, etc. Plus, you can avoid paying for major common-area maintenance items that an older building might need, such as repainting or roof repairs.

Two, if you buy before construction is completed, you can often have the finish work done to your liking: You can choose paint colors, bathroom tile, kitchen surfaces and so on.

Three, you might get a good deal. Developers often need to “pre-sell” a certain percentage of the units in order to complete their construction financing. For that reason, they may be willing to offer very attractive prices to people who buy in early.

On the other hand, there are a lot of things you’ll have to worry about that aren’t a problem for buyers in more established communities. Here are some things to consider:

► The developer’s offering plan will contain the specifications for the unit, including exact size, the standard appliances or appliance allowance, what finishes to expect, and so on. This document can be dense and difficult. You’ll want to make sure you understand exactly what you’re supposed to be getting, and make sure the developer fulfills his or her obligations as the construction continues. (Don’t just rely on brochures and verbal promises, which might not be legally binding.)

► At the time you put down a deposit, the condominium documents might not yet have been finalized. You’ll want to look these over carefully as soon as they’re official, to make sure you agree with the rules for the association. Are you happy with the condo fees, any restrictions on pets, and other issues?

► If construction is delayed for any reason, will you have a place to live until the building receives a certificate of occupancy?

► Getting a mortgage for new construction can be difficult. For instance, Fannie Mae won’t back a mortgage unless a certain percentage of the units in the building are already under contract. That means that if you’re one of the earlier buyers, you might have trouble getting a loan. Even if you’re a later purchaser, Fannie might be reluctant to okay the building if a significant number of the units will be owned by landlords or investors, as opposed to people who actually live there. (Some developers try to solve this problem by having a “preferred” mortgage broker who is skilled at obtaining loans for a particular development. This might be useful, although some buyers don’t like the idea of using a broker who is working with the seller.)

► Another mortgage problem is getting a good appraisal. Appraisals are based on “comparable sales,” and with a new building, it might be hard to find comparable sales. An appraiser might have to rely on sales of units in older buildings, and this could result in an appraisal that comes in below your purchase price.

► Don’t assume that new construction always means high-quality construction. Developers have been known to cut corners, especially with last-minute details and especially if they’re having trouble selling units and need to reduce their costs. You could wind up with low-quality windows or tile, or problems with floors, ventilation systems, and so on. It’s vital to hire a good home inspector even for a brand-new home.

► While it’s true that a new building shouldn’t need any major repairs for a while, it’s also true that a new association probably won’t have built up a reserve fund, so condo fees might need to be higher to account for that.

► If a significant number of units in the building remain unsold, the developer might rent them. You might wind up with a lot of short-term neighbors who don’t share your level of interest in property maintenance.

►Buyers of new construction sometimes qualify for property tax abatements. You’ll want to make sure you understand what tax savings you’re entitled to, and how to obtain them.

► Closing costs can be higher for new construction, so be prepared.

Many people who buy a new-construction condo end up with a beautiful home at a reasonable price. Just be sure to consult with a knowledgeable advisor first…so you can increase your chances of being one of them.

The Boston North Shore real estate attorneys are located in Malden, Massachusetts and serve the entire Greater Boston North Shore region including the communities of Everett, Revere, Chelsea, Somerville, Cambridge, Medford, Arlington, Winchester, Woburn, Burlington, Stoneham, Melrose, Wakefield, Saugus, Lynn, Peabody, Salem, Marblehead, and Swampscott. Our real estate lawyers speak and provide legal services in Spanish and Italian.

Avoid bankruptcy: Just Turn In Your Car, Right?

by Susanne Robicsek, North Carolina Bankruptcy Attorney

Bankruptcy isn’t something that you think you need to do.  After all, you don’t owe that much money, or you think you can manage your debts – except for your car.  So what to do?  You have it all figured out.

You are going to voluntarily surrender your car.

No need to file bankruptcy.

That is going to help a lot, by getting that car off your back.  Right.

Wrong!

A car lender who thinks that they aren’t going to get paid wants to get their collateral back as soon as they can, with as much ease and little effort or cost as possible.  They don’t want to pay a repo man to chase the borrower, so they often make is sound like they are cooperating you, and even helping you.

Voluntary surrender is a repossession and a default of your credit agreement.  It will not only harm your credit rating, but it will also normally result in a sale of your car for much less than you could have sold it for ……. and you will owe the lender the deficiency balance, which is the difference between the price it sold for and the balance on the loan.

You might be able to work something out with your lender.  The NC Attorney General gives some good tips if you are afraid your car may be repossessed, however the list misses one big suggestion.  Call a bankruptcy lawyer to see if bankruptcy can help you keep your car, or at least avoid the deficiency debt you will owe if your car isn’t sold for enough to pay the whole balance owed.

Chapter 13 might allow you a longer period of time to pay for your car, allow you to pay without having to catch up missed payments in a lump sum, lower your monthly payments on the car to make it more affordable, and/or even reduce the total amount you pay for the car if the car is worth less than you owe.

Additionally if you are behind because you were paying other debts, those debts might be able to be written off or down so that your money is going to protect the car you need, rather than pay the credit cards you can’t afford.

Chapter 7 can also help in some circumstances, either by getting rid of the other debts described above so you can afford your car, but you might have to catch up payments or reach an agreement with your car lender if you are behind, which might be done via a reaffirmation agreement.   Be aware that how courts treat car loans and reaffirmations vary from state to state, district to district, so it is good to have a bankruptcy lawyer familiar with your area to guide you.

You really want to consider this option while you still have your car – while not impossible to get it back (sometimes) after repossession, it is much easier to avoid the problem and protect the car from being picked up in the first place.

The Attorney General points out not to wait, but if you don’t seek the help of a bankruptcy lawyer soon enough, you might miss your opportunity there too.  I see a lot of people who tried to avoid filing bankruptcy or didn’t know that they could file and save their car.

Instead, they ended up filing for bankruptcy because they couldn’t pay for their car, and they lost their car to boot.

The Massachusetts bankruptcy attorneys at Simmons & Schiavo concentrate in bankruptcy matters and filing for bankruptcy in Massachusetts. Our bankruptcy attorneys serve the Greater Boston and Boston’s North Shore region including the communities of Everett, Revere, Chelsea, Somerville, Cambridge, Medford, Arlington, Winchester, Woburn, Burlington, Stoneham, Melrose, Wakefield, Saugus, Lynn, Peabody, Salem, Marblehead, Swampscott, Norfolk County, Middlesex County and Essex County, Massachusetts.

In general, anyone who is considering remarriage later in life should talk to an estate planner first in order to avoid possible tax problems. But this new law gives added urgency to this rule, because it potentially could result in huge additional taxes – or tax savings – and planning for this possibility is essential.

Generally, when a person dies, his or her estate can give an unlimited amount to a surviving spouse tax-free. However, if the person’s bequests (plus large lifetime gifts) to other beneficiaries – such as children – total more than a certain “exemption amount,” then an estate tax must be paid. For 2012, the exemption amount is a little over $5 million.

In the past, the general rule was that the exemption amount applied separately to each spouse. So if a husband died first, his estate could use his exemption amount, and when his wife died later, she would get her own exemption amount.

But under the new tax law, if the first spouse to die doesn’t use all of his or her exemption amount, the difference can be passed along to the other spouse. So suppose a husband dies and doesn’t use any of his roughly $5 million amount (because he leaves everything to his wife). When the wife dies, her exemption amount will be her own $5 million plus the $5 million that the husband didn’t use. So instead of being able to leave about $5 million tax-free to her heirs, she can leave over $10 million tax-free – a potential savings of millions of dollars.

So how does this affect remarriage? It has a big effect, because if a widow or widower marries a new spouse, and the new spouse dies first, the widow or widower will lose any “leftover” exemption from the first spouse, and will have only the exemption from the second spouse.

So suppose a widow “inherits” a $5 million exemption from her first spouse. If she remarries someone who has a $0 exemption, and he dies first, the widow will lose the original $5 million exemption. Potentially, her estate will have to pay millions of dollars in taxes that would otherwise have gone to her heirs.

On the other hand, suppose a widow inherits no exemption from her first spouse. If she remarries someone who has a $5 million exemption, and he dies first, the widow will inherit the $5 million exemption and her estate will potentially save a fortune in taxes.

Either way, this is something that should ideally be planned for before the widow or widower ties the knot.

In addition to tax and financial planning, widows and widowers might also want to specifically address the issue of “inherited” exemptions in a prenuptial agreement.

Future changes?

As things stand now, the law about inherited exemptions expires at the end of 2012. But there’s a good chance that Congress will extend it, so it’s wise to make plans regarding it.

The $5 million-plus exemption amount is also scheduled to expire at the end of 2012, and it’s not clear what will happen after that. It appears that if Congress does nothing, the exemption amount will reset at only $1 million starting in 2013. This fact alone makes estate planning now all the more vital.

Serving Middlesex County and Essex County: Our estate planning attorneys concentrate in estate planning matters and serve the Greater Boston and Boston’s North Shore region including the communities of Everett, Revere, Chelsea, Somerville, Cambridge, Medford, Arlington, Winchester, Woburn, Burlington, Stoneham, Melrose, Wakefield, Saugus, Lynn, Peabody, Salem, Marblehead, Swampscott, Middlesex County and Essex County, Massachusetts.

Converting Investment Property to Your Primary Residence (original source)

Exclusion of Gain from Sale of Residence

Many people are aware that they can sell their primary residence and not pay taxes on a significant amount of gain. Under Section 121 of the Internal Revenue Code, you will not owe capital gains taxes on up to $250,000 of gain, or $500,000 of gain if you are married and filing jointly, when you sell a home that you used as your primary residence for at least two of the previous five years. Taxpayers can take advantage of this exclusion once every two years.

Property Converted from Investment to Primary Residence

Taxpayers used to be able to trade into a rental, rent the home for a while, move into it and then exclude all or some of the gain under Section 121. Provided they lived in the home as their primary residence for at least two years, they could sell it and exclude the gain under Section 121 up to the maximum level of $250,000/$500,000. In recent years Congress enacted two amendments to Section 121 in order to limit the benefits of Section 121 when the property has been used as a rental.

First, if you acquire property in a 1031 exchange and then convert it to your primary residence, you must own it at least five years before being eligible for the Section 121 exclusion.

Second, the amount of gain that you can exclude will be reduced to the extent that the house was used for something other than a primary residence during the period of ownership. The exclusion is reduced pro rata by comparing the number of years the property is used for non-primary residence purposes to the total number of years the property is owned by the taxpayer.

For example, a married couple uses a tax deferred exchange under Section 1031 to acquire a house as investment property. The couple rents the house for three years, and then moves into it and uses it as their primary residence for the next three years. The couple sells the property at the end of year 6, netting a total gain of $800,000. Instead of being able to exclude $500,000, the couple will not be able to exclude some of the gain based on how many years they rented the house. Since they rented it for three years out of six, 50% of the gain, or $400,000, will not be able to be excluded. Because of this new limitation, the couple will be able to exclude $400,000 of the gain rather than $500,000.

Exceptions

There are a couple of exceptions to this restriction. If the house was used as a rental prior to January 1, 2009, the exclusion is not affected. Using the example provided above, if the three year rental period occurred prior to January 1, 2009, the exclusion would not be reduced and the couple would be able to exclude the full $500,000.

Another important exception is that property that is first used as a primary residence and later converted to investment property is not affected by these restrictions on excluding gain. For example, if you own and live in a house for 18 years and then you move out and rent the house for two years before selling it, you can receive the full amount of the exclusion. Because your investment use occurred after the last day of use as a primary residence, all of the gain accumulated over your 20 year ownership of the property can be excluded, up to $250,000, or $500,000 for married couples.

Combining Exclusion with 1031 Exchange

Fortunately, the rules are favorable to taxpayers who have more than $250,000/$500,000 of gain and are looking to combine Section 1031 with Section 121 to both exclude and defer tax. When the property starts out as a primary residence and then is converted into an investment property, you can exclude gain under Section 121, and then defer tax on the remaining gain, provided you comply with the requirements of both Section 1031 and Section 121.

The Internal Revenue Code still provides investors with favorable options for exclusion of gain and tax deferral. The rules can be complicated, but with the right planning taxpayers can still make the most of their real estate investments. For additional information about the 1031 exchange process or to open an exchange contact us at First American Exchange.

References: Internal Revenue Code §121; Housing Assistance Tax Act of 2008 (H.R. 3221).