Estate planning involves both the proper management of your assets during your life, to ensure your retirement years are as comfortable as possible, and the proper passing of your estate and your assets to beneficiaries with as few taxes and costs as possible.  With thoughtful and timely estate planning, you can take care of not just yourself, but your loved ones as well – benefiting them for decades to come.

 

According to Forbes, more than half of all Americans do not have the most basic estate planning documents.  Reasons for putting off such simple planning is it is seen as a chore, that it’s not necessary, that their estate is modest and they don’t need to.  Unfortunately, by the time it is necessary to execute these documents, it is too late.  This is true whether you have a small, modest, or large estate.

 

Below are some crucial documents to ensuring your estate is protected:

 

Durable Power of Attorney:

The Durable Power of Attorney is a document that allows an Agent to act for you.  With most, the powers become effective immediately upon execution.  But there are alternatives; requiring a doctor’s certificate before the agent can act. The powers here are quite broad. Generally, the agent has powers to lease, sell or transfer real estate, file income tax returns, and borrow or mortgage money on your behalf. In addition, your agent can exercise any rights under any policies or contracts that you have entered. Your agent can be sued or can sue on your behalf. Your agent may also make gifts to others on your behalf. Because of this power, the Agent has certain obligations; which apply to making changes to or transferring assets with your wishes in your Last Will and Testament being maintained and a consideration.  Come in today and plan your life’s important financial situations, and those whom you want these decisions entrusted to, today!

 

Health Care Proxy:

There are many variations to the Health Care Proxy.  They can become effective upon execution or upon unfortunate circumstances rendering you unable to communicate your health care decisions.  It can include a living will, allowing you to die with dignity; a very important clause if you do not want to be kept alive on life support machines.  It can contain privacy release statements for children, brothers and sisters, etc.   Also, due to recent changes in the Massachusetts laws, the agent in your health care proxy (and/or power of attorney) should have the authority to sign you in or to discharge you from a nursing home, rehab, or other medical facility. If your agent does not have this authority, it may be necessary for your agent to obtain a guardianship through the probate court.  Come in today and let’s plan your life’s important health care decisions together.

 

Homestead:

The homestead protects the equity in your home up to $500,000.  The homestead protects your home from the claims of most creditors but does not protect your home from the IRS, Department of Revenue or if you go into a nursing home.

 

Living Will:

Due to both scientific and medical advances, society has been presented with a variety of Bioethical issues.  Some of these advances have provided physicians with enhanced control over the time and death of their patient.  A living will is not legal in Massachusetts, but this document addresses some of these many challenges that are posed in making end of life decisions when you, or your health care agent, are unable.

 

MassHealth & Medicaid:

The cost of a nursing home often goes overlooked to those that are not in need.  However, some of the more expensive facilities can cost about $12,000 a month.  The belief that Medicaid or the government will pay for any long term care in these facilities is purely a myth.  In Massachusetts, help can come from the form of MassHealth.  However the process is very nuanced, involves a look back period of 60 months, and is subject to continuous changes.  Whether you need help applying or appealing an eligibility decision, our law office can help!

 

Trusts:

A trust is the best way to provide for beneficiaries when you want limits on when they inherit from the estate and/or how much they get at time of distribution.  For this purpose, there are two types of trusts that are commonly used: a Testamentary Trust or a Revocable Living Trust.  Come in today and let’s plan for the future of your loved ones and the support you will give them.  Below are some additional terms and certain types of Trusts that I work with my clients to complete.

  • Will with Testamentary Trust:     This estate plan is often used when children are under a certain age. The “Trustee” will manage the assets for the benefit of the children. Each year, the trustee will account to the children, their guardian and/or to the court the income and expenses of the trust. The trustee will make distributions to the children and or to their guardian. The trustee will distribute each child’s share as you have provided in the trust language of the will. This trust is part of probate. There may be annual costs for preparation of an account, as well as costs for publication of this account and court filing fees.

 

  • Revocable Living Trusts:     This type of trust enables a person to put separately owned assets into a trust.  The purpose of creation may be directed at a variety of purposes.  This type of trust is often used in tax planning. Trusts can be used when clients are concerned about the size of their estate and any possible taxes it may be required to pay. Both Massachusetts and the Federal government assess an estate tax on a person’s assets at the time of their passing.  This number is fixed at $1 million for Massachusetts and grows at the rate of inflation every year on the Federal level. However, there is an exemption for each State and Federal tax. For clients with taxable estates, the exemption amount can be put in a trust for the benefit of the spouse and perhaps other beneficiaries. The assets in this trust generally escape taxation at both deaths.

 

  • Irrevocable Life Insurance Trust:     This type of trust requires you, as the donor, to establish a trust that is irrevocable.  You name a person or entity to manage the assets in the trust and the trustee will purchase life insurance on the life of the donor, you, rather than transfer existing life insurance into the trust.  The trustee will pay the premiums annually for the insurance in this trust.  The advantage of this estate planning technique is that the trustee can “purchase” assets from the estate alleviating the need to have a “fire sale” or spread the payment of estate taxes over a period.

 

  • Charitable Remainder Trusts:     These types of trusts involve establishing a trust for the benefit of a charity of your choice.  During your lifetime, you use or direct the use of the trust funds for your benefit or that of another.  The payment that you receive is based on either a fixed percentage or a variable one.   At your death, or the death of the other beneficiary, the funds will pass to a charity.

 

 

WILLS:

Also known as your Last Will and Testament, this document is important to control who will receive your property, which property they will receive, and who will be in charge of not only gathering those assets but distributing them as well.