ESTATE PLANNING LEGAL SERVICES

DO I NEED AN ESTATE PLAN?

By Attorney Lynda L. Saracusa

DO I NEED AN ESTATE PLAN?

YES! You DO need an estate plan so that YOU and you alone can make decisions about your property and belongings. If you have minor children you could direct who you want to care for them if die unexpectedly.

WHAT WILL AN ESTATE PLAN DO FOR ME?

An estate plan enables you to make decisions about your property while you are still alive.

You designate whom you wish to manage your affairs, who will inherit your property, and under what specific circumstances and when.

You can name the guardian of your minor children. You name who will manage your property or money if your children or spouse are unable to do so.

WHO WILL BENEFIT?

YOU will benefit from the knowledge that your personal affairs are in order and the people you wish to provide for are named in your will.  

YOUR SPOUSE AND CHILDREN will benefit.   

Your loved ones will be taken care of.    

Nothing will be left to chance.  

A properly executed will and other estate planning documents such as a durable power of attorney and a health care proxy (medical directive), indicate your wishes in unforeseen disastrous circumstances.   

Almost any situation is better handled when your written wishes and instructions are in place.  

WILL AN ESTATE PLAN SAVE MY FAMILY MONEY?

An estate plan takes into account the total value of your estate, planning ahead may reduce, minimize and possibly eliminate any Federal or Massachusetts estate tax which is due from your estate.  

By planning ahead, you are able to move assets into a form of ownership which can ensure a smooth transition. More of your property will end up where you want it instead of paying it over to the government in the form of Federal and/or Massachusetts estate taxes.

WHY SHOULD I HAVE A WILL?

You should have a will to specify who you wish to inherit your property and whom you want to name as your personal representative or executor.   

If you die without a will, anyone who qualifies (even a creditor of your estate) according to Massachusetts law can become the estate representative if no petition for appointment is filed after a certain period of time.

Equally important to naming your personal representative, you may also name a guardian for your minor children. 

You may also appoint someone to manage, preserve and invest property or money for anyone unable to do so on their own. If you fail to name someone, any appointment choice is left up to the Probate Court.

In Massachusetts, if you have no will, all property owned solely by you will be distributed according to the law of intestate (without a will) succession.  

WHO SHOULD I NAME AS EXECUTOR OF MY WILL?

The most logical choice for the Personal Representative is the principal beneficiary under the will or the person who will take the largest share of the estate.  

If the principle beneficiary has little or no business experience or is a minor, someone else who is better qualified would be a more logical choice. The nominee can be a relative or a friend. It could be a lawyer, but that is not a requirement.  

The Personal Representative is required to gather all the estate assets, pay the debts of the estate and follow the distribution instructions in the will.    

The Personal Representative is responsible to file the will and the necessary papers to settle the estate and account to the Court for the property and money that he or she receives.  

The named Personal Representative can hire an attorney to assist or direct the entire process.  

The Personal Representative is also responsible for filing any tax returns relative to the decedent and the estate.

DO I HAVE A TAXABLE ESTATE?

In Massachusetts, as of January 1, 2008, the estate tax exemption was increased to $1 MILLION. This is less than the Federal exemption amount per person for 2008.    

The current Federal exemption is now $11,400,000.00.   The Massachusetts exemption has remained the same at $1,000.000.00 and is the same in 2019. 

See chart below for Massachusetts and Federal estate tax exemption amounts through the years.  

If your total estate including all sole property, your share of jointly held property, personal property, life insurance, annuities and pensions, plus any other includible assets is less than those limits total you probably do not have a taxable estate.

Additionally, your taxable estate may be further reduced by the permitted deductions for debts of the decedent (the person who dies) burial expenses, and estate, administration costs and expenses and the amount of any property your surviving spouse inherits from you.

The amount a surviving spouse inherits may further reduce a taxable estate. See MARITAL DEDUCTION below for more information about this valuable reduction in a taxable estate.

FEDERAL ESTATE & GIFT TAX STRUCTURE

** Unified Credit

WHAT IS THE MARITAL DEDUCTION?

The Marital deduction permits the deduction of up to 50% of the value of property which passes to a surviving spouse to be deducted from the Massachusetts gross estate.   There is no upper limit on the amount that may be deducted. 

The deduction may only be claimed against property interests which are includible in the decedent’s Massachusetts Gross estate.

The Marital Deduction is also available to reduce estate tax liability for estates subject to Federal taxes.

This is a valuable estate planning tool, however, once the first spouse dies, unless the surviving spouse remarries there is no marital deduction available.

Further estate planning would be necessary to reduce or eliminate estate taxes if the surviving spouse’s estate exceeds the then current exemption amount.

WHAT IS A TRUST?

A trust is a legal entity created to hold property for the benefit of another.  A trust can provide continuous management and transition of ownership of trust property even in the event of minority, or mental or physical disability or incapacity of the creator of the trust.

WHAT DOES A TRUST DO?

A trust can hold property, manage property for someone who is unable or unwilling to do so by choice, reason of age, incapacity or inability.  

A trust can be used for estate planning purposes in a number of ways to protect, preserve or grow assets.

What do you think your eighteen-year-old would do if he or she suddenly inherited $500,000? Or more? It's a scary thought, isn't it?

If you have minor children, or children who are not completely capable of managing large sums of money, a trust enables you to appoint someone competent to control, manage and or invest money and other assets for their benefit until they are able to manage it on their own.

The person named to manage the trust assets and property is called the TRUSTEE. The Trustee has no ownership interest in the property of the Trust, the beneficiaries are the true owners.

A trust can be testamentary (written within a will) or a separate trust (intervivos) created now during your lifetime.

In many instances, trusts are used to avoid the delay and expense of probate.

ARE THERE DIFFERENT KINDS OF TRUSTS?

Yes. There are many types of trusts.    

Trusts can be revocable (changeable) or irrevocable (not changeable).  

Different circumstances require different types of trusts. 

Great care needs to be taken before placing property in an irrevocable trust because once transferred property or money cannot be removed, the beneficiaries of the trust may not be changed and due to its irrevocable nature, the terms of the trust cannot be amended.

A revocable trust could manage your property but your interest in the trust is still includible in your estate for tax purposes.

If you retain sufficient “incidents of ownership” in the trust (such as the extensive management rights, ability to control the property, the right to amend or revoke the terms of the trust, the right to remove or replace trustees, or similar powers) the Internal Revenue Code and pertinent regulations dictate that the property may be considered part of your estate even if held in the trust name.

OTHER ESTATE PLANNING DOCUMENTS

WHAT DOES A POWER OF ATTORNEY DO? SHOULD I HAVE ONE?

A power of attorney is a simple (but powerful) legal document that authorizes someone else to act on your behalf in business or personal matters.    

A power of attorney can be used and is effective immediately after signing and being notarized.  

A power of attorney gives the appointed person (who does not need to be a lawyer) the right to conduct business, sign papers, or act in the absence on behalf of the principal or signer.  

A power of attorney be a specific power with very limited authority, or it can be general with broad terms and powers, and it can specify that it expires at a particular time.  It could also become effective when a certain event happens.  

Death of the principal or signer terminates all authority granted by a power of attorney.  

If the principal signs a revocation of the power of attorney, the power of attorney terminates.

A durable power of attorney is one permitted by Massachusetts law. This type of power may be used so that person named may act even if the principal becomes mentally or physically incapacitated after signing.

Both non-durable and durable powers of attorney cease to have any legal effect upon the death of the principal.

Having a durable power of attorney may eliminate the necessity of the costly and lengthy procedure required to have a guardian or conservator authorized to act for the principal.

WHAT IS A LIVING WILL/MEDICAL DIRECTIVE/HEALTH CARE PROXY?

A living will or a health care proxy is a legal document that enables you to name someone you trust your health care agent.  

This person could make health care decisions but only if you are unable to do so or unable to communicate to make your decisions known.

Your agent could make any health care decisions that you yourself could make if you were able to do so.  

In the alternative the authority given can be limited by specific instructions you give to your agent.  

By granting your agent full authority, the agent could consent to or refuse any medical treatment, including heroic or artificial treatment that may keep you alive.

A medical directive is recognized in some other states. It is not customarily used in Massachusetts. A medical directive instructs the doctor of the person signing it whether they want heroic measure used to preserve their life.

ESTATE PLANNING SERVICES