ESTATE PLANNING

Estate Planning

Many people do not realize the complexities of a successful estate plan. Proper estate planning is the best way to provide your family with security and peace of mind. Not only can it ensure your financial legacy is preserved and shared the way you see fit, it can also document your choices for medical care and end-of-life services and help your loved ones avoid having to navigate through a legal mess while dealing with emotionally trying circumstances. Also, a vital component to successful estate planning is engaging in careful tax planning. Massachusetts and federal estate taxes have high rates, and the government can take a significant portion of your wealth. Proper estate planning will also enable you to plan for the smooth transfer of wealth to the next generation, as well as avoid probate.

Planning for Incapacity

If you become incapacitated, you won’t be able to manage your own financial affairs. Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated. However, without proper planning, they must petition a court to declare you legally incompetent, which can be a lengthy, costly and stressful process.

If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to manage your affairs (i.e. withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home). You can do this by using a durable power of attorney.

In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care. The law allows you to appoint someone you trust to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. This is called a Health Care Proxy. In addition to a Health Care Proxy, you should also have a HIPAA release. A HIPAA release authorizes the people who might want to know to get information about your medical care. In addition, you may want to have a “living will” which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.

Wills

Your last will and testament reflects your values and how you want your legacy to be remembered, handed down the way you want it to be, and to the people you will entrust it to. Your will is a legal document by which you designate the persons who will receive the assets you own. A will is also the instrument used to appoint legal guardians for your minor children. A will does not avoid the expense, delay and publicity of a probate proceeding, nor does it help to reduce estate tax costs or protect your assets from the costs associated with long-term care. This is why a trust is usually recommended in addition to a will.

Trusts

We can help establish the trust or trusts most appropriate to your objectives, including tax minimization, probate avoidance, creditor protection, Medicaid eligibility and business succession.

A revocable trust, or “living trust,” allows you to add or subtract assets and trust terms as circumstances change over the years. We will assist you to fund the revocable trust while you are still living, and we also ensure that any remaining assets you own in your name will “pour over” into the trust upon death. The trust serves the same purpose as a will regarding distribution of assets to your designated beneficiaries, without the time delays, expense and publicity of probate proceedings.

An irrevocable trust may be desirable to those with larger estates. With the irrevocable trust, assets are set aside for specific beneficiaries and are not accessible to you once contributed. An irrevocable trust offers the opportunity to take advantage of lifetime gifting while further reducing the size of your taxable estate and provide creditor protection for beneficiaries.

There are many other types of trusts, which may be beneficial to you. Contact us and we can explain all the types and applications of a trust, including: Irrevocable life insurance trusts; Intentionally defective irrevocable grantor trusts; Realty trusts (nominee trust); and Special needs trusts.