Understanding Massachusetts Estate Planning

The best way to guarantee your property and health care wishes are honored is by creating an estate plan. An estate plan helps to resolve whatever legal issues may arise upon death.

Making a will

Creating a will is not necessarily complicated, and it prevents the complication of dying intestate. If intestate, your estate will be taxed the highest, and important decisions will be up to the state of Massachusetts.

Wills should contain:

  • Personal property distributions including gifts to family, trusts and any donations
  • Provisions for minor children and pets
  • The executor or executrix who shall manage your affairs

Probate prevention

Probate is a court-supervised process that occurs after death. Probate authenticates the will, names an executor, catalogs property, handles debts, finds heirs and distributes property per the will or, if there is no will, according to Massachusetts law.

Formal probate is best avoided when possible, as it costs money and takes time. Massachusetts offers a simplified probate procedure for low value estates of under $25,000.

You cannot avoid probate completely, but many assets can be transferred outside of probate, including:

  • Living trusts provide tax advantages to beneficiaries. Trusts do not go into probate. Creditors cannot access the trust.
  • Property transfers to the remaining joint owner of real estate, bank accounts, vehicle, brokerage account and individual stocks and bonds, and will avoid probate.
  • Beneficiary bank accounts and CDs that are payable upon death avoid probate as are transfer upon death registrations and deeds like cars and real estate.
  • Transferring assets while alive, through an inter vivos gift, limits the tax burden to beneficiaries. It cannot be taxed when you do not own it.

Powers of attorney for finances

Setting up a financial power of attorney saves worry and woe. You select someone you wish to manage financial choices on your behalf in case you become incapacitated. This avoids court making the choices for you.

If you note that the document is effective immediately, this mean you’re covered instantly. Noting the power is “durable” allows the arrangement to carry on into the future. Also, a “springing” durable power of attorney will start later, upon incapacitation.

Health care decisions/advanced care planning

Ensure you have the health care and end-of-life choices you want by making end-of-life decisions. These choices are enforced through an advance directive that applies for any incapacitating illness and end of life decisions, which can be:

  • A living will document that contains your wishes regarding health care instructions, including if you wish to receive life support systems
  • Power of attorney that specifies the appointment of a health care representative that will make health care choices on your behalf

Massachusetts offers forms online. These forms are basic, and if you require a customized document, you should consult an estate-planning attorney.

Funeral arrangements

Including funeral provisions in the estate plan avoids the burden and expense going to the family. Choices include:

  • Make prearrangements and prepayment. This is an uncertain and potentially ineffective way to plan ahead, because inflation may necessitate an additional money layout upon death. Should you relocate, it is possible to lose the value of the contract, you may not receive a refund and the company can go out of business.
  • Record your final arrangements with a witnessed will, power of attorney, living will or final letter of instruction. An insurance policy made payable to an irrevocable trust, or special bank account can pay for the arrangements.

More planning decisions

There are other matters that may be applicable to your situation. Consider:

  • Estate taxes may need to be paid if your estate is more than $5.25 million for the year 2013.
  • A life insurance policy can help your spouse or family handle the final costs.
  • Create a limited partnership under IRS "estate freeze" to reduce tax liability. Heirs could owe estate taxes as much as 55 percent if you don’t have a plan. Also arrange a buy-sell agreement or trust for sale or succession of your business.
  • Pets are property. Arrange for pets in the estate plan to be sure of your animal’s sustained care. A pet trust or pet guardian may ensure the well being.

Federal and Massachusetts laws change often. Ensure your estate is handled in accordance with your wishes by contacting an estate planning attorney in Massachusetts.

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