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THE REVERE ADVOCATE – FRIDAY, MAY 30, 2025 Page 25 (A “Yes” vote is for the budget. A “No” vote is against it.) Sen. Lydia Edwards Yes PRESCRIPTION DRUGS (S 3) Senate 34-5, approved an amendment that would allow Health Policy Commission regulators to place a maximum price limit on some medications, capping what patients, providers, pharmacies and others in Massachusetts would pay. “I was supportive of this amendment because of the impact high prescription drug prices have had on the most vulnerable in my community” said Sen. Pavel Payano (D-Lawrence). “Nobody should have to make a choice between paying their bills and paying for their prescriptions.” “While I agree with the intention behind this amendment, I believe that the subject matter needs to be addressed. I voted no … because I believe, given its magnitude, that it should go through the regular committeereview process,” said Sen. John Keenan (D-Quincy). “While versions of the legislation that this amendment refl ect have been fi led in previous sessions, this amendment includes new language that deserves a committee hearing and additional committee review.” “If this doesn’t belong in a budget, I’m not sure where else it belongs,” said amendment sponsor Sen. Cindy Friedman (D-Arlington). “This is having a profound eff ect on how we use our resources in the commonwealth, and if we don’t address this issue sooner rather than later, we will be in major trouble. Our hospitals are in major trouble because of this, our insurers are in major trouble, our state is in major trouble, so this, in my mind, is absolutely the right place for this.” (A “Yes” vote is for the amendment. A “No” vote is against it.) Sen. Lydia Edwards Yes HUMAN TRAFFICKING (S 3) Senate 12-28, rejected an amendment that would mandate human trafficking training for all hotel, motel, lodging house or bed and breakfast establishment employees in the Bay State, from the front desk to housekeeping and food service, in order to equip them to recognize and respond to traffi cking situations. The measure also requires these establishments to post in plain view, in the lobby and in any public restroom in their establishment, a written notice developed by the attorney general, which must include the national human trafficking hotline telephone number. Amendment sponsor Sen. Mark Montigny (D-New Bedford) said the passage of the amendment will send a message to survivors that we support them. He noted that almost no one traffi cking people is in jail in Massachusetts and said that when people call him and ask him why, he doesn’t have an answer. Training front-line people in hotels to recognize trafficking and posting a hotline number might give a victim a chance. He said he has worked with hundreds of survivors and advocates on this and they always stress why is there so much inaction on Beacon Hill. Sen. Mike Rodrigues (D-Westport), who voted against the amendment, said the goals are laudable, but this is a situation where you really don’t create a mandate that every hotel employee, no matter their job, is required to be trained to recognize human traffi cking without extensive discussions with the labor unions that represent the employees. He noted this mandate could arguably involve tens of thousands of individuals. (A “Yes” vote is for the amendment. A “No” vote is against it.) Sen. Lydia Edwards No CAPITAL GAINS TAX DISTRIBUTION (S 3) Senate 5-34, rejected an amendment that would require any excess revenue in capital gains revenue over $1 billion to annually automatically be transferred as follows: 80 percent to the Rainy Day Fund; 10 percent to the state’s Pension Liability Fund; and 10 percent to the State Retiree Benefi ts Trust Fund. The amendment would replace a section that distributes 5 percent to the Rainy Day Fund; 90 percent to the state’s Pension Liability Fund; and 5 percent to the State Retiree Benefi ts Trust Fund. Sen. Bruce Tarr (R-Gloucester), the amendment sponsor, said that putting only 5 percent into the stabilization fund at a time when we recognize there’s a possibility of a downturn in federal support for our budget is not a good idea. He noted we have a stabilization fund to ensure we have those resources when we need them. Sen. Mike Rodrigues (D-Westport), who voted against the amendment, said the Rainy Day Fund is currently already funded at an impressive gold standard of $8.1 billion. He argued that putting the majority of the funds into the Pension Liability Fund would be wiser and would boost the state’s bond rating. (A “Yes” vote is for the amendment. A “No” vote is against it.) Sen. Lydia Edwards No INCREASE ESTATE/DEATH TAX EXEMPTION (S 3) Senate 5-34, rejected an amendment that would increase from $2 million to $5 million the amount of money that is tax exempt from the value of a person’s estate when calculating the state’s estate/death tax that a person is required to pay following their death before distribution to any benefi ciary. The increase to $5 million would be implemented over three years. Most Republicans are against any such tax and coined the name “death tax” to imply that the government taxes you even after you die. Most Democrats support the tax and call it an “esBEACON | SEE Page 26 5 OR 5 POWER A 5 or 5 power provides a benefi ciary of a Trust the power in any calendar year to withdraw the greater of $5,000 or 5% of the Trust principal. Therefore, for any Trust that has assets less than $100,000, the beneficiary can withdraw up to $5,000. For any Trust that has more than $100,000 in assets, the beneficiary can withdraw up to 5% of the Trust assets. The situation usually occurs when the Settlor of a revocable Trust dies, which in turn results in the Trust becoming irrevocable and the Trust then provides for the benefi t of a surviving spouse. Per the Internal Revenue Code, there has to be a limit on what the beneficiary can withdraw each year in order to avoid any negative tax consequences. If a Trust provision allowed the benefi - ciary to withdraw more than $5,000 or 5% of the Trust principal each year, then the IRS would consider this to be a “general” power of appointment and some or all of the Trust assets could be included in the benefi ciary’s estate for estate tax purposes. What is one advantage of including such a provision in a trust document? Such a provision might be suitable in a situation of a second marriage wherein one spouse does not want the surviving spouse to have unfettered control over the Trust assets. Such a power would provide a minimum of a $5,000 withdrawal on the part of the surviving spouse each year. This could be important if the Trust itself generated very little income for the year that was required to be distributed to the surviving spouse pursuant to the terms of the Trust. Alternatively, if the Trust principal ended up being $1,000,000 at the time of the fi rst spouse’s death, the surviving spouse could take up to $50,000 each year (5% of $1,000,000). Furthermore, such a right might put some of the Trust’s assets at risk if the surviving spouse was involved in litigation. Generally speaking, creditors can reach what you can reach as a benefi ciary of a Trust. The 5 or 5 power also allows the benefi ciary to withdraw up to 5% of the Trust’s assets, even if the withdrawal is not for an ascertainable standard such as for the health, education and support of the surviving spouse. This allows the surviving spouse to simply take a withdrawal without meeting any such standard. The surviving spouse would not have to answer to a Trustee that might not be so cooperative when it comes to Trust distributions. The other benefi t of the 5 or 5 power is that so long as the surviving spouse does not exceed its parameters, upon the surviving spouse’s death, the assets in the Trust not subject to the 5 or 5 power will not be included in her taxable estate for estate tax purposes. In this situation, the first spouse to die has the ability to exempt $13.9 million in assets from his or her taxable estate by funding the so-called “family trust” portion of a marital deduction trust wherein the surviving spouse still would enjoy rights to income, discretionary Trustee distributions of principal to the surviving spouse based upon a health, education and support standard and the 5 or 5 power. Upon the surviving spouse’s death, the remaining Trust assets not subject to the 5 or 5 power will be distributed free of estate tax to the children of the fi rst spouse to die. However, the Trust assets subject to the 5 or 5 power in the hands of the surviving spouse would be taxable in her estate upon her death. If her federal taxable estate ends up being $13.9 million or less, there would be no federal estate tax anyway. If there were $5,000,000 of Trust assets, at most, only $250,000 would be taxable in the surviving spouse’s estate. It also looks as though Congress may extend most of the key provisions of the 2017 Tax Cuts and Jobs Act meaning the federal estate tax exemption may not be dropping down to approximately $6million as of January 1, 2026. A huge diff erence from an estate planning standpoint. 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 Master’s Degree in Taxation.

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