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Estate Planning

• Newsletter

Estate planning is important no matter what your age or net worth. We work so hard during our lives to provide for our family and accumulate assets but then put little thought into what will happen if we become disabled or die. The reality is that some day one or the other (or both) will happen. Many times this is a fact that we don't want to deal with right now, but it is so important that we take steps now to plan and protect our family and all that we have achieved during our lives. Many people would be unsure or inaccurate in their answer if asked "what would happen to your assets if you were gone tomorrow?". Without a will or trust, upon a person's death, that person's assets are distributed according to Massachusetts law. Below is the basic distribution scheme in Massachusetts if a person dies without a will.

Marital Status	Kids	Distribution
Married	No	Spouse to receive first $200,000 of the assets and 1/2 of the remaining assets. The other 1/2 to parents, if alive.
Married	Yes	Spouse to receive first $200,000 of the assets and 1/2 of the remaining assets. The other 1/2 to kids.
Single	No	Entire estate to parents, if alive. If parents are not alive, to brothers and sisters.
Single	Yes	Entire estate to kids.

A good estate plan involves much more than just deciding where your assets will go when you die. It also deals with probate issues, health care issues, tax planning, and what will happen if you become incapacitated. Several of the legal documents discussed below are used as part of the estate planning process.

Will

Your will is a statement of how your property will be distributed upon your death. Not only does your will state who will get what, it can also state how and when they will get it. This is important if you are leaving assets to children. Your will should also name an executor. An executor is the person who will locate your assets, sell them if needed, and distribute them according to your directions. It is a good idea to list a back-up executor in case the first executor you choose is unable or unwilling to do the job. You can divide your property and leave it to anyone you see fit. A will must leave a certain amount to a spouse or the spouse could waive the will and be entitled to a statutory share of the estate. However, you do not have to leave anything to children, as long as you specify in the will that they are excluded. Lastly, if you have minor children your will should name a guardian for them. This is one of the hardest decisions for people to make. Regardless of what assets you may have, our children are our most important asset. Deciding who you trust to raise your children if you are no longer here can be extremely difficult, but nonetheless it is a decision you will want to make and not leave up to a court to decide. The one thing that a will won't accomplish is avoiding the probate process. Upon death a will must be presented to the probate court within thirty days. The process of creating and executing a will is complicated due to legal requirements that must be met for a will to be valid. There are many "do it yourself" type will kits. However if your will is not created according to the legal rules, it may not be considered a valid will. A small savings now may cost your estate thousands in the end.

Trust

There are many types of trusts. Two basic trusts are a living trust and a testamentary trust. A living trust is a trust that you create during your life. You transfer assets into your trust and are able to maintain control of the trust if you desire. One benefit of a living trust is avoiding probate. A testamentary trust is a trust that is used together with a will and comes into being at your death. When you die, your assets (through your will) pass into the trust and are then distributed.

Power of Attorney

A power of attorney is a legal document in which you give another person the right to make legal decisions and act in your place. A power of attorney allows someone else to handle your legal affairs, including paying bills, cashing checks, and selling assets. A power of attorney can be used if you are disabled or unable to make legal decisions. A power of attorney terminates upon death.

Health Care Proxy

A health care proxy is a legal document that gives another person the right to make medical care decisions for you, should you be unable to do so. We really learned the importance of this document when we heard of Terry Schiavo. She did not have a health care proxy and as such the court appointed her husband. The long legal battle between her husband and her parents made Terry Schiavo a household name. This is why no matter your age, everyone should have a health care proxy.