The following is a joint Blog Post prepared by Justin Kelsey, Esq. of Kelsey & Trask, P.C. (co-author of Scaling the Summit: A Family Law Blog) and Danielle G. Van Ess, Esq. of DGVE law, LLC (author of the Massachusetts, Wills, Trusts, and Estates blog).

The Judges in the Probate & Family Court have a lot of discretion to decide what constitutes income when the Court is considering child support or alimony.

According to M.G.L. c. 208 s. 34, the court can consider "amount and sources of income... and the opportunity of each for future acquisition of capital assets and income" when dividing property or awarding alimony. This language obviously leaves a lot of leeway for the court to consider all "sources of income" including potential "future" income.

Similarly, the Massachusetts Child Support Guidelines indicate that the court can consider "gross income from whatever source regardless of whether that income is recognized by the Internal Revenue Code or reported to the Internal Revenue Service or state Department of Revenue or other taxing authority." The specific list of possible income ends with "any other form of income or compensation not specifically itemized above." Just like with alimony, this broad language provides the Court with discretion to include family gifts as income, especially if the gifts are regular. For example, this could include the right to withdraw funds from an Irrevocable Life Insurance Trust (ILIT) established by parents to reduce estate tax liability and made available to their children as evidenced by regular Crummey notice letters.

The MA Appeals Court recently confirmed this in an unpublished decision holding that a Judge did not abuse his discretion by attributing income to a father based on family gifts, and using that attributed income to calculate child support. DiMambro v. DiMambro (Lawyers Weekly No. 82-281-10) (3 pages) (Appeals Court – Unpublished) (No. 09-P-1387) (Nov. 9, 2010).

“Future income” under the alimony statute, or “attributable income” under the child support guidelines may also include cash gifts such as annual gifts according to the gift tax exclusion amount, which is presently $13,000 per year per individual or $26,000 per year for a married couple to another person.

As the courts may consider all sources of income, particularly where one’s adult child is separated or divorcing it may be best to leave real property (such as a home or vacation home), gifts, and inheritances to one’s adult children in protected trusts rather than outright to attempt to ensure that those gifts will be preserved for one’s child and any grandchildren and not be subject to claims of the child’s ex-spouse. Parents of adult children should also be very cautious about putting their adult child’s name on their real property or bank accounts for purposes of convenience and assistance with management as those assets may become assets of the child as well and subject to claims in bankruptcy or divorce.

Given the Judge's broad discretion in this area, families should discuss gifts and the impact of those gifts with their attorneys to ensure they understand all the relevantthose gifts might have.

The following is a guest blog post written by our colleague Danielle G. Van Ess, Esq. of DGVE law, LLC in Hingham, MA.

You might be surprised how many of my new estate planning clients realize, after we’ve talked a little, that their ex-spouses are still named as the primary beneficiary of their life insurance policies or, more often even, their retirement accounts. And given the value of those assets, their reactions in that moment of realization are far less surprising. If you are divorcing or divorced, you need to ensure that you have changed the beneficiary of those and other pay on death type accounts.

And given that you will no longer be sharing your life with your ex-spouse, it’s likely you won’t also want him or her to be the one to speak for you in the event of your incapacity or be the one to make medical decisions for you, including whether to discontinue life support, if you are ever unable to do so yourself. So if you already had such estate planning documents in place (such as a Health Care Proxy or Living Will), now is the time to revise them. And if you have never got around to putting those critically important legal instruments in effect, there’s no time like the present.

But if you are a parent of a minor child, there is an even more important reason to sit down with your estate planning attorney immediately. You must make appropriate provisions for the care of your child in case anything happens to you. Yes, it’s awful to think about, maybe the second worst thing a parent could imagine, but it’s even worse not to address it and leave your child’s fate up to chance. It is your parental responsibility, not to mention a selfless act of love, to do everything you possibly can to ensure that your child be raised by the people of your choosing. It is not enough to choose and discuss it with people privately; it must be memorialized in the appropriate legal instruments. Godparents do not, for legal reasons, count.

While it’s true that if you were to die before your ex-spouse, he or she would be the “natural” guardian of your child and most likely to assume full custodial responsibility, it is also true that he or she might die while your child is still a minor and if yours is the only legal document nominating a guardian (i.e. if your ex-spouse did not also legally name a guardian), your wishes could provide persuasive guidance to the court. But if your ex-spouse were to die before you, the court would likely look to the guardian you legally named to raise your child. If you and your ex-spouse are able to be civil with one another and co-parent as cooperatively as possible for the distinct benefit of your child, see if you are able to agree on and both name the same legal guardians for the sake of sparing your child more uncertainty in the event that you and your ex-spouse should both happen to die at the same time or very close in time.

Those are the bare bones basics. Above and beyond that, there are some more complex considerations. For examples, if you are concerned that your ex-spouse might remarry and then divorce again losing your child’s inheritance to that subsequent ex-spouse, you might consider creating an asset protection trust to secure your child’s inheritance from that as well as other possible (and not at all unusual) possibilities. If you and your ex-spouse have an irrevocable charitable trust, it may be possible to divide it. Or if you and your ex-spouse have established a pattern of gifting that you do not wish to continue, you should be careful to make your change of intentions clear.

Don’t feel overwhelmed. Your estate planning attorney should be able to meet with you and help you identify your most pressing concerns, your most important priorities, and based on that properly advise you and help you create a new plan to meet your new situation so you can move forward into the next chapter of your life with peace of mind knowing you have your legal affairs firmly in place.

The American Bar Association's GP Solo e-zine has an article on estate planning for same-sex partners. I want to point out only two issues I have with this article:

• Funeral arrangements is an area fraught with problems for same-sex couples. Many states limit the right to make these arrangements to the decedent’s immediate family. Others, such as Ohio, have enacted legislation removing that restriction and allowing every person to name someone to make these decisions. For same-sex couples, these laws permit each partner to name the other as the person authorized to carry out the arrangements.

Indiana is one of those states which allows only family members to make funeral arrangements. However, that obstacle can be overcome in two ways.

The first method requires the person involved to set up a funeral trust. The article does not mention this rather simple device. Each person would go to a funeral home, decide what type of funeral they want, and pay for it through a pre-needs trust. The trust can be funded through the purchase of an insurance policy. (Actually, I recommend to this all my clients. It does solve the problem of the family deciding the funeral arrangements at the time of death.)

Secondly, get a power of attorney. The power of attorney statute gives to the attorney-in-fact (the person to whom is given the power of attorney) the power to make funeral arrangements, and the disposition of the body. This article does a fair job of describing the myriad powers given to the attorney-in-fact via a power of attorney.

I would also point out that along with funeral arrangements, one needs to include the burial location. That will mean buying funeral plots and specifying those burial plots as the person's final destination.

Solo also has an article on taxes and same-sex couples. It is also worth reading. I would add that under Indiana's inheritance tax no exemption is available for unmarried couples. The need for planning cannot be understated in these circumstances.

I find no one likes estate planning. I have nightmares about some of my business clients but we do muddle through. I think this will be the big issue coming up locally in the next few years as many of the local business owners get old.

Then I find this article in Toronto Star which seems so very familiar. The same problems between generations just a different country. Okay, there is some reassurance in that the resistance to estate planning meets the same obstacles as here.

I do suggest that anyone reading this blog and has a business take a look at the article With the exception of one small detail, there is good information there for us Hoosiers.

From Wills, Trusts & Estates Prof Blog:

Mrs. Svajada of Corpus Christi, Texas left instructions to be buried wearing her ring

As the ring was worth $7,000, her daughter and friend decided that it was a "waste" to bury the ring and thus attempted to pry the ring off the Mrs. Svajada's body during the funeral. The daughter was charged with felony theft.

See AP, Woman charged in theft from mom's coffin, Feb. 16, 2007.

Charming. Sounds like Springer Show material.

A recent case brought close to home the importance of having a power of attorney. An adult has a stroke and the wife cannot pay the bills because all of his income is in a bank account in his name only. Having had a stroke, I had to file for guardianship. I charge $150.00 for a power of attorney with a health care provision and a living will, but a guardianship starts at about eight times that much. So much money and stress could have been avoided if the husband had had the proper documents!

Why did he not have the proper documents? Because he never thought that he would need them. A power of attorney appoints a person to act for you as if they were you to take care of your business. A healthcare power of attorney appoints a person to act for you in taking care of your health issues. A living will tells a healthcare provider (your doctor and/or hospital) that you do or do not want to receive life support.

I have a Top Three Reasons of Why You Do Not Need a Power of Attorney. I can tell you that if you answer "NO" to any two of the following, you need a power of attorney and a living will:

3. You have a power of attorney and living will.
2. You will never be incapable of making decisions about your business or health care.
1. You want to receive medical treatment if you are incapacitated regardless of the costs.