Estate Planning Attorney serving Fitchburg, Gardner, Leominster, Lunenburg, Ashburnham, Westminster, SOUTHERN NEW HAMPSHIRE, and ALL POINTS IN BETWEEN.
New clients often say that they do not have an estate plan in place. However, most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Massachusetts’ or New Hampshire’s laws of intestacy. Of course, this may not be the plan they would have chosen, and such a “plan” can lead to very unpleasant results, burdensome and expensive court proceedings, and even unintended disinheritance of family members! On the other hand, a properly drafted estate plan will replace the terms of the state’s estate plan with your own.
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What is Estate Planning?
Estate planning is the process of determining how your assets will be preserved and managed upon your death, or in the event you are incapacitated.
Why Estate Planning is Important
Having a comprehensive estate plan in place will give you peace of mind, knowing that your loved ones will be taken care of. Here are some goals you can achieve with proper estate planning:
- Provide support and financial stability for your spouse and avoid unintentional disinheritance
- Preserve assets for future generations
- avoid costly court proceedings, called probate
- Ensure all of your assets will be distributed according to your wishes
- Minimize taxes and expenses, such as estate tax
- Ensure that individuals of your choosing can make decisions on your behalf, in the event you become incapacitated
- Support a worthy cause or charity of your choosing
- Reduce family squabbles over your estate
Estate Planning Strategies
Your Last Will and Testament
Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:
- A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
- A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate. And especially if you own real estate, the probate process can take fourteen months or longer!
- A will is a good place to name a guardian (or back-up parents) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.
Trusts: Revocable Living Trusts, Irrevocable Trusts, Special Needs Trusts, etc.
Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the trust-maker, the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a revocable living trust, for example, a person may create a trust (the trust-maker) and name themselves the current trustees (trust managers) who manage the trust assets for their own benefit (trust beneficiary).
Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust-maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary, including estate taxes. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries. If well drafted, another advantage of trusts is their continuing effectiveness even if the trust-maker dies or becomes incapacitated.
Do you Own Real Estate? Keep This in Mind.
If you decease owning real estate, whether it is worth $100,000 or $1 million, if you do not take steps to avoid probate by establishing a trust or otherwise, your assets are subject to an extended probate process that can take fourteen months (or more), tie things up, and cost between $5,000 and $15,000 in filing fees, out of pockets, and legal fees, and that is if the estate is uncontested! Contested estates cause even more costs, delays, and headaches. Taking steps to avoid this process will give peace of mind to you and your family when the time comes.
Powers of Attorney
If you become incapacitated, your family could face expensive and time consuming probate court proceedings even during your lifetime! A power of attorney is a cost effective way to minimize or avoid such “living probate” difficulties. It is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. Powers of attorney are very powerful, and their use needs to be carefully governed and explained, so they should not be self-done or through a legal form. All powers of attorney terminate upon the death of the maker. Because they are very powerful and important documents, durable powers of attorney should be frequently reviewed and updated when necessary.
Health Care Documents (or Advance Directives)
An advance directive is a health care document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own medical decisions. Think of it as a power of attorney for health care, and it serves as a valuable companion to a power of attorney to avoid a probate court’s involvement in your health care decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in Massachusetts, which is why attorney guidance is crucial. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery.
Have questions about estate planning? Contact Michael D. DellaMonaca, an experienced state planning attorney located in Fitchburg, MA.