Elliott S. Topkins Massachusetts Real Estate and Title Atty

The stormy winter we have experienced needs to be factored in when purchasing a condominium unit. Roofs and other systems have been under a considerable amount of strain, and according to casualty insurance statistics, claims are at record levels. Those leaks through ceilings and walls can be plastered and painted over. The causes of the problems, however, are being addressed by Condominium associations and the results may well be future special assessments. I am continually told by Sellers that the Condominium Trustees "do not keep minutes of their meetings." This is distressing on two levels (1) is it a short-hand way of saying the Trustees really never meet? or (2) are there matters which are being discussed which can have potential financial impact to the Unit Owners, which the Trustees would rather keep to themselves? In either circumstance, this type of response raises a "red flag" for me, the attorney tying to protect my client who is considering a Condominium purchase.

More than at any time, the present state of Condominium governance places a responsibility on us as real estate professionals to ask questions and probe. Ask the Management Company or a member of the Condominium Board of Trustees whether the Condominium is planning an assessment for a new roof or extensive system repairs. If there are assessments coming, try to negotiate with your Seller to pay some ,or even all, of planned assessments. Speak to other unit owners. Find out what they know.

At Topkins & Bevans, we pride ourselves on giving responsible representation to Buyers. We review (1) Condominium documents, (2) minutes of the Trustee meetings and (3) recent budgets. and financial statements. We poke holes in these documents, where necessary. We direct question to the Management Company, the Trustees and the Seller so that when the Buyer moves forward, he or she is apprised of the animal he or she is dealing with. Sometimes, our Buyers move forward even though we have warned them of the pitfalls associated with their purchase. That is their choice, but at least we have permitted them to make an informed decision.

There always seems to be an excuse why we cannot sit down, organize our priorities, settle on the right set of fiduciaries and get our estate plans in order. What most people do not seem to realize, however, is that permitting the state to use its formulae to settle your affairs after your death in almost all circumstances does not produce a result that you would have wanted. More than that, it can cause heartache and pain to those you leave behind, and family disputes that many times cannot be smoothed over, even over time.

There follows a working outline of manageable steps which you can take to prepare to sit down with an estate planning attorney. If you have a good idea of the answers to these questions, the actual drafting of your will and constituent documents can be relatively painless and completed within a reasonable time at a reasonable cost.

1. Determine whom you need to protect and provide for.

For married couples with children, this generally flows naturally. Your surviving spouse is your key beneficiary with children being taken care of should you both perish in a common accident. But even with these basic tenets agreed upon, there are some ancillary decisions which need to be addressed.

In Massachusetts, 18 years of age is majority. If you and your spouse die and leave children, those children will be entitled to any assets you leave them at age 18. Is 18 the age you want your child to have unbridled use of hundreds of thousand, or even millions, of dollars? Most of the time the answer to this question is "no" although many of us have life insurance policies, or pension or profit sharing plans which provide for proceeds to pass to a spouse, or alternatively, children. The way to protect your children from themselves is to create a Trust mechanism, either in your will or by way of revocable trust, which will permit your children to have use of these assets but not be able to spend them without any controls. Only by getting your estate plan drafted and making proper beneficiary designations can you be sure that these objectives can be met.

For unmarried couples, the perils of not having wills are serious. Massachusetts intestacy laws make no provision for people who are not spouses, children, parents, siblings or blood relatives. Whatever your intentions are regarding your partner, it behooves you to make them clear through a will or revocable trust.

Further, when you are not married to your partner, issues such as healthcare decisions will not flow to your partner without specific designation of the person in a healthcare proxy or HIPPA designation. Many are the situation where the person you really want deciding important health issues for you is shunted aside in favor of family members who really are not aware of your wishes and are only involved because of blood relationship.

1. Determine which individuals you wish to act as fiduciaries and obtain their consent to act in these capacities.

There are generally four (4) different roles which need to be addressed. Many times the same people can act in more than one capacity, but often there is a benefit in spreading the roles out over several people.

•(a) Executor: This person needs to be honest and organized. Choose someone who can take charge of your affairs, select appropriate professionals to act on behalf of the estate, and move on. Generally, about 18 months time is needed to complete the Executor's tasks.

•(b) Guardian: Surviving spouse will automatically take over as your children's guardian. With simultaneous death of spouses, care must be taken to designate someone who can shepherd your children through the years of minority. Be careful about selecting your parents. While they may be the natural choice, the burden of raising small children may be too much for them. Siblings with children are normally the best guardians, although care has to be taken when a larger than manageable family is created with the addition of your children.

•(c) Trustee: This is normally a long term person, so age considerations are important. If you will want a Trust to exist until your youngest child is 35, you should think about someone who is likely to be around through the period in question. Again, honesty and good judgment are traits which make a good Trustee. You do not need an accountant, attorney or investments advisor for a Trustee. You just need someone who can find suitable professionals to serve the Trust.

•(d) Health Care Agent: This is the person you name in your healthcare proxy to make medical decisions for you when you are unable. Your spouse or partner is a natural choice. Often it makes sense to make alternative selections should the person you wish to use be unavailable.

Armed with answers to the questions and issues described above, you are in a very good position to move forward with your estate plan. At Topkins & Bevans, we try to make the process efficient and manageable. Appointments to discuss estate plans are entirely free of charge, and it is only after we have agreed on a document program, that we will discuss a fee arrangement with you.

Over the years, it has become more and more apparent to me that sales involves connecting with people who know, and appreciate, what I have to offer, not at my convenience, but, realistically, at theirs. One way I have found to stay in touch with these important contacts is to utliize the "5/25 Sytem" on a consistent basis.

The System is simple. Pick out your 5 most important clients, or customers, and put them on a schedule. Then, analyze the rest of the important people in your business and pare that list down to 25 people. Obviously, the list of 30, as I call it, can change on a dime. The best way for it to change is for some new player to arrive on the scene to supplant someone else, who is marginal. The worst way your list can change is for a "favored 30" player and you to have a falling out, or disagreement, which makes continued contact with that person difficult, or maybe even impossible. If the latter happens, be decisive!!!! Excise that person from the list and find an acceptable substitute.

1. The "Favored Five". You need to get yourself in front of the favored five at least once a week. Since these people are so important, it probably makes sense to vary your contact. Some weeks it may be a long email or a meeting for a cup of coffee. Other weeks you might invite them to a play or ball game. Whatever the excuse, you MUST be in front of these five people every week, without fail. At some point, your "Favored Five" are going to see what you are doing. None of mine have every held against me my elevating them to this favored status. Most understand that I am making a commmitment to frequesnt communication with them so I can acknowledge how important they are to me practice.

2. The "Terrific Twenty-five". These people are very important to me, but they have not achieved "Favored Five" status. In time, they may reach that level. For the time being, the "Terrific Twenty-five" need to be contacted at least once a month. Obviously, you can get with them more than that, but under no circumstances, should you let a month go by without an email, telephone call, visit at their office, or other contact. You need to stay on the "Terrific Twenty-five" radar screen. You do not need to make them a weekly contact, but they need to know that you are "around" and you care.

The results of this rathered structured approach have been impressive for me. My "Favored Five" people have generally been the ones who respond to new initiatives and proposals. When I am in front of them, they "remember" things which they wanted to discuss with me and thus new opportunities arise. The "Terrific Twenty-five" are in a slightly different category. They have not lost touch with me, but I am not a constant part of their business life, in most circumstances. That can sometimes be a good thing. Sometimes, the "Terrifics" want to change their role. Many times this is justified. The group of thirty is not static; you will see changes evolve as you move ahead.

There is nothing mystical about the 5 and 25 numerical selections. What is important is that you identify your "real players" and your "might be real players" as soon as possible, and then make sure you find ways to have continuing interaction with them. For me, this has been an incredible "practice builder" and also a way for me to develop lifetime friendships. What is better than those two results?

When parents want to help their children buy a home, they are often stymied by the myriad gift and other tax considerations which make providing for their children a difficult task. Recently, with the assistance of Scott W. Hazard, a Senior Vice President at GuardHill Financial, and a financial planning associate, our firm was able to circumvent the obstacles and provide a "clear path" to generous parents for effecting real assistance to their children.

There follows a description of how this transaction was structures:

1. The generous parents form an Limited Liability Company (the "LLC"). The parents became the Managers of the LLC and are majority Members. The Operating Agreement for the LLC provided that the parents put substantially all of the cash required to close the purchase into the LLC. The children are also Members under the Operating Agreement but only to the extent of a few thousand dollars, which entitled them to a small share of the interest in the LLC.

2. The LLC entered into the Purchase and Sale Agreement for the purchase. The LLC also became the Mortgagor when the purchase closed. Disclosure of all aspects of the transaction was made to the Mortgage lender, and the only extra document the Lender required were the personal guarantees of all four Members of the LLC.

3. The transaction took place in 2008. Prior to the end of the year, each of the parents made gifts of $26,000 to the children. These gifts were made in the form of amending the Operating Agrement to increase the percentage interest of the children as Members of the LLC. The parents intend to make similar gifts in 2009 and thereafter, until the home is 100% owned by the children.

4. Because of the size of the gifts, no gift tax return was required of the parents and the parents were not forced to use up any of their lifetime transfer exclusion. If the children are able to develop additional funds, they may make payments to the parents at any time to increase their Member ownership. It is generally advisable for the parties to obtain an appraisal of the home from time to time to make an accurate measure of the value of the Member transfers.

Even in today's sometimes difficult real estate market, parents want to assist their chuildren to become homeowners. The LLC route described herein is one which has many advatages, and I would recommend that any parents who are inclined to assist their children in attaining home ownership consider it.

Among the learning experiences for parents with children away at college is the fact that having reached the age of 18, your child is no longer your ward, and you are no longer your child's legal guardian. That doesn't mean that cannot pick up the tab for tuition, room and board, but you are not, as of right, entitled to see your child's grades, and you are not, as of right, entitled to be informed of health issues confronting your child or to make medical decisions for your child.

The grade issue can be circumvented by interaction with your child. The health considerations are a little bit more complicated and require some forethought. The two documents that will assist you in being in position to help your child in medical emergencies, or even routine medical decisions, are a Health Care Proxy (which gives you the right to make "informed consent" decisions for your child) and the FICCA form (which gives you access to your child's medical records). These documents are part of our standard Estate Planning package when we assist our clients with Estate Plans. We are now suggesting that the appropriate execution of these forms, and in certain instances, a durable Power of Attorney, become part of your checklist for sending your child away to college either in January or August.

We, at Topkins & Bevans, can prepare these forms for you, and explain their proper execution, for a minimal fee. We can do this work from Massachusetts, and you can execute them in your state as long as you acknowledge that the documents have been drafted in accordance with Massachusetts law. Please contact me to go over what is required, and how we can assist parents in this area. With the reticence that many medical institutions have developed to release medical information and records, the Health Care Proxy and HIPPA Form have become "don't leave home without it" items.