MASSACHUSETTS ESTATE PLANNING
An Overview of Estate Planning
It’s human nature not to want to think about the end. While dealing with the finite nature of life is difficult, it’s important to consider and plan for your departure. The steps you take now will make all the difference in how your legacy is passed on. The realization that action is needed to protect property for your loved ones is the first step in estate planning.
While most of us are familiar with a last will and testament, a will is only the tip of the iceberg when it comes to what you can and should do to manage the property you leave behind. However, before delving into what your estate plan could or should include, it’s important to first understand what an estate and an estate plan is.
What Is an Estate?
It’s a common misconception for individuals to believe that only the wealthy have estates. In reality, virtually every American adult has an estate. Simply put, an estate is everything you own. Your estate includes your bank accounts, investment accounts, houses, cars, and any other personal property you possess. In addition to what you own, your estate can also include what you owe. Common forms of estate debt include mortgages, medical bills, student loans, credit card bills, and business invoices.
While an estate is typically talked about in the context of death, your estate exists while you are alive. The disposition of your estate is what happens when you die. You are not legally bound to create a plan for your estate, but it would be ill-advised to avoid creating one.
What Is Estate Planning?
Estate planning is the process of figuring out how your estate will be allocated to others in the event of your passing. Estate planning also gives you the opportunity to figure out how your estate will be managed if you are alive, but unable to make decisions due to physical or mental disability (also known as incapacity). In addition to dividing property, an estate plan can help you reduce or eliminate estate taxes, facilitate the transfer of a business, provide medical care instructions, protect your children’s property, appoint a legal guardian for a minor, cover funeral expenses, protect assets from creditors, and more.
If you die without an estate plan, the Commonwealth of Massachusetts has intestate succession laws that govern how your estate will be distributed and who will oversee the distribution as the personal representative. By not creating an estate plan and leaving your estate to pass through intestate succession costs you nothing, however it’s a potentially lost opportunity to reduce state and federal estate taxes. Moreover, the lack of an estate plan can cause serious headache and heartache for your loved ones, and potentially cause conflict.
Who Needs an Estate Plan?
In short, every individual could benefit from the creation of an estate pan. Even if you don’t have many assets to your name, failing to provide a preference for medical care in the event of incapacity or parental care for your minor children could prove to be disastrous when your wishes aren’t carried out.
Even individuals with modest estates may find that intestacy wouldn’t appropriately distribute assets. State rules were written with a traditional family in mind. However, the dynamics of the modern family have evolved to be more varied and complex. Adopted children, blended families, family from previous marriages, and unmarried cohabitating partners are more frequently included in the family and may not be included to receive an intestate share. For instance, foster children and stepchildren that have never been legally adopted will not automatically receive a share of your estate under Massachusetts intestate succession laws.
A little planning can go a long way to ensure your wishes are carried out and your assets are distributed to the correct beneficiaries.
What Is Probate and Is Going Through Probate a Bad Thing?
Probate is the legal process by which a deceased individual’s estate is distributed under court supervision. Property distributed through probate would include any property governed under a will or property governed by state intestate succession laws if there is no estate plan.
Probate has earned a reputation for being slow, expensive, and inconvenient. There are many benefits to using tools that distribute assets outside of probate. Benefits of avoiding probate include giving beneficiaries immediate access to cash, avoiding interference from a probate judge, avoiding the expenses related to probate, and keeping family matters private (probate files are public court records). An estate planning attorney can help you create a plan to reduce or eliminate the role of probate court.
Common Estate Planning Tools
Estate planning is the concept of organizing your affairs to provide clarity to your loved ones about your wishes and goals in the event of your disability or death. An estate plan can be created in a number of different ways using different planning tools. Some of the most common estate planning tools are outlined below.
A will is a written document created to provide instructions for your loved ones when you die. A will can be as simple or complex as you need it to be. You can use the document to name an executor/personal representative, identify who inherits what property, who will be appointed as a guardian for your children and more. A will is an extremely useful document, but it does have its limitations.
- A will does not control all of your estate. Wills only govern probate property. Thus, they are limited to property titled in your name. Jointly owned bank assets, trusts, and retirement accounts generally are not governed by a will.
- You will lose control in the event of incapacity. A will only takes effect at the time of your death. In an event of incapacity, such as falling into a coma, you could lose control of what happens to your estate if you only have a will.
- A will won’t help you avoid probate. As previously mentioned, a will only governs probate property. Therefore, a will won’t help you reduce or eliminate the role of probate court, probate is required. Probate can cost your loved ones both money and time. If you have assets located outside of Massachusetts, things get even more complicated with ancillary administrations in the state where you own property, and your beneficiaries could face challenges from excluded heirs.
A will is a good starting point for an estate plan, but it is not the only solution for your estate planning.
A trust can ensure control over the assets in your estate that your will does not apply to. A trust is a written agreement that creates a fiduciary relationship between a trustmaker/grantor and a trustee (the individual who has the right to hold assets for named beneficiaries). Unlike a will, you can maintain considerable control over a trust while alive if the trust is a revocable living trust. Trusts bypass probate, avoid or reduce estate taxes in certain cases, and can offer asset protection for beneficiaries. Most estate plans include both a will and one or more trusts.
Power of Attorney
A power of attorney gives you the ability to name an individual who will be responsible for making financial and legal decisions in the event you become incapacitated. Creating a power of attorney ensures your loved ones do not have to obtain a court appointed conservatorship if you become incapacitated and that the people you trust are in charge of your financial affairs.
Health Care Proxy & Living Will
A health care proxy is another document that deals with incapacity. The document is used to appoint an individual who will be in charge of making healthcare decisions on your behalf in the event of incapacity.
Another document that’s used for healthcare decision making is a living will. It is used to provide clarity to your health care proxy about your wishes relating to end of life decisions. A living will can communicate your preferences for life support, tube feeding, artificial hydration, and pain medication.
How Do You Start Building an Estate Plan?
If you’ve landed on this page, you’ve already taken the first step to building an estate plan. The decisions you make regarding your estate can have a lasting impact for your loved ones. It’s important to educate yourself on the estate planning process and the tools you can use to achieve your legacy goals. Education shouldn’t stop at this blog post though.
We can evaluate your financial situation, listen to your future goals, and help you craft a comprehensive estate plan that makes sense for you. There is no such thing as “one-size-fits-all” when it comes to estate planning. Certain tools such as wills and revocable living trusts are used more often than others, but the tools that will benefit you will depend entirely on your unique situation and your goals.
When Should You Start Building an Estate Plan?
Unfortunately, many individuals put off estate planning until a baby arrives or they approach retirement. However, the future is unpredictable and more time is never guaranteed. You never know what will happen tomorrow, which is why it’s important to start planning today. Ultimately, estate planning is a lifelong process that should begin when an individual reaches adulthood.
Estate planning needs evolve with major life changes such as marriage, parenthood, divorce, remarriage, the death of a loved one, the birth of a grandchild, and everything in between. Moreover, inheritance and tax laws surrounding estate planning change over time as well. In light of these changes, estate plans should be revisited and revised to ensure plans are updated to match legacy goals.
Contact Us at Eckert Byrne LLC
We pride ourselves on the process and flat-fee schedule that we’ve developed to help clients achieve their planning goals. It allows clients to remain engaged and invested in every step of the estate-planning process. For plans that follow this process, we offer a flat fee pricing schedule. Our comprehensive estate plans range from $6,000 to $25,000+ which is determined by the type and complexity of the estate plan and by your personal needs and goals. By doing this, we are shifting the responsibility for understanding the scope of your estate planning (EP) needs onto us, the experts, and taking away that risk and uncertainty from you. Once we have discussed the scope of the planning, you can move forward without anxiety or wondering whether communicating with your attorney will increase the cost of your planning. It won’t. What it will do is give you a better plan, so we encourage you to feel comfortable with communication throughout the process.
The estate planning attorneys at Eckert Byrne LLC view estate planning as more of a lifelong process than a one-time event. We strive to maintain ongoing relationships with our clients so that we can tailor and update plans as needs and laws change. Our law firm is distinguished by our comprehensive and holistic approach to estate planning. Contact Eckert Byrne LLC today to have your questions answered and begin your estate planning journey. Simply fill out the form on this page or call (855) 743-3136.