THE EVERETT ADVOCATE – FRiDAy, July 17, 2026 Page 11 FIGHTS DISRUPT | FROM PAGE 3 Officials said no officers or Irrevocable Trusts And Rental Real Estate R ental real estate is one type of asset that can be transferred to an irrevocable Trust without any adverse tax consequences. The real estate can also be sold by the Trust and the net sales proceeds therefrom can be used to purchase another piece of rental real estate at any time during or after the socalled “fi ve-year look-back” period. Whenever you do transfer rental real estate to such a Trust, there is a fi ve-year period that must elapse before this otherwise disqualifying transfer will no longer be considered a disqualifying transfer. In other words, once the fi ve-year period has gone by, the assets held inside the Trust will not be countable for MassHealth eligibility purposes. There would also be no adverse income tax consequences associated with the sale of the rental property while held in the irrevocable Trust. In eff ect, the same capital gains taxes, if any capital gain to begin with, would be paid just as if the rental real estate were held directly in your name. A typical Medicaid irrevocable Trust is designed as an “income only” Trust, meaning the Trustee is obligated to pay out the income (if any) earned by the Trust to the Settlor (often referred to as the Grantor or Donor) of the Trust. “Net” rental income is “income”. Therefore, you would take all of your gross rents collected for the year and deduct all of the expenses attributable to the rental property in order to arrive at “net” rental income. The Settlor is the individual who creates the Trust and who is retaining the right to receive the income for the rest of his or her life. There cannot be any right to receive any “principal” from the Trust under any circumstances. If there is, the Trust will not qualify, and the assets held inside the Trust will be countable for purposes of MassHealth eligibility. To be technically correct, each tenant would write out a check made payable to the Trust. You would apply for a federal ID number in the name of the Trust and once obtained, open up a checking account in the name spectators were injured during the incident. Earlier in the evening, at approximately 8:04 p.m., offi cers responded to a report of juveniles causing property damage at a Walgreens. One juvenile was arrested in that incident. Police said the youth matched the description from a BOLO (Be On The Lookout) alert issued earlier by Revere Police regarding a report of a juvenile with a fi rearm. Authorities said no fi rearm was recovered, and no juveniles involved in any of the evening’s incidents were found to possess a fi rearm or display or discharge one during the celebration. The city’s fi reworks display began at 9 p.m., 30 minutes earlier than originally scheduled because of forecasted thunderstorms. Officials emphasized that the decision to move up the display was weather-related and not connected to the disturbances. In their statement, Van Campen and Strong condemned the violence while praising the response of law enforcement offi cers. “Violence of any kind has no place at City events,” the statement said. “We recognize that incidents like this are unsettling for residents and families, and we remain committed to providing safe, family-friendly community events through proactive planning and a strong public safety presence. We thank the Everett Police Department and our regional law enforcement partners for their swift, professional response, which helped restore order quickly.” Authorities have not released the identities of the juveniles because they are minors. The investigation remains ongoing. of the Trust. You may also wish to file a separate Trust income tax return to report the rent income and rent expenses for each calendar year. The federal form is Form 1041 and the Mass form is Form 2G. These types of Trusts are drafted in such a way as to be treated as “Grantor-type” Trusts for federal and state income tax purposes as the Settlor is considered to be the “owner” for federal income tax purposes. Therefore, the Trust will not pay any federal or Mass income taxes if there is any net rental income (i.e. a profit). Rather, the Trust will issue a Grantor Letter to the Settlor that would be utilized by him or her in preparing an individual income tax return. The Grantor Letter is what allows you to fi gure out how much income to report on your individual income tax return. These Medicaid irrevocable Trusts are therefore designed to be income tax neutral, resulting in no increase or decrease in income tax liability to the Settlor. If the rental real estate is sold by the Trust, the net sales proceeds therefrom must be retained in Trust and the Settlor would then be entitled to the investment income generated therefrom, whether it be from interest income, dividend income or capital gain income. In the alternative, if replacement real estate is purchased, title must be held in the same Trust and not be purchased by the Settlor in his or her own name. Otherwise, that would start the fi ve year look back period all over again. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a masters degree in taxation.
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