Estate Planning

A will can be the entirety of an estate plan or its cornerstone — allowing you to do so much more than distribute your assets. You can use a will to name whom you want to take care of your children as their guardian. Your will can also indicate the person you have chosen to take care of the probate of your estate. Keep in mind, however, that anyone can access public court documents, which includes the contents of wills that go into probate. A will may not be the best option for those who want to discreetly preserve their legacy.

Trusts are created by trustors or settlors, who — along with their lawyers — decide how their assets should be distributed to trustees, who in turn hold on to the assets for the beneficiaries of the trust. Sometimes, the trustee and the beneficiary are the same. A trust can be used to manage your money while you are alive and after your death, and it can help avoid taxes as well as costly and time-consuming probate. Trusts can protect your assets from creditors and determine the terms for distributing your legacy to your beneficiaries.

A power of attorney, or POA, is a legal document that gives your trusted loved one the ability to make important decisions on your (the principal’s) behalf according to the scope of the document. A durable power of attorney is a special POA that that does not become ineffective in the event that you become incapacitated, unlike a regular POA, which ends the moment you become incapacitated. A healthcare proxy is specifically the person you have designated to make healthcare-related decisions on your behalf. These may be the same people, or they may be different.

Typically included with your will or trust, beneficiary designations and detailed lists of assets are the kinds of fine details that are often overlooked in canned approaches to estate planning. Neglecting these can lead to expensive and time-consuming efforts on the part of your loved ones. In one such case, an executor of her grandfather’s estate found herself needing to track down and hire attorneys in multiple states in order to probate mineral rights royalties for the estate.

A credit shelter trust (CST), created after the death of the first spouse in a married couple, places assets into a trust that are separate from the estate of the surviving spouse in order to pass tax-free to beneficiaries, such as children or grandchildren, at the time of the death of the surviving spouse. 

Estate taxes can be costly to the very people you want to benefit from your legacy, but estate planning attorneys can help you make the best decisions about how to ensure that your assets go to whom you intended. Tax exemptions, trusts and life insurance can all be used to reduce the tax burden on your beneficiaries.

The average stay in a Massachusetts nursing home costs families $125K a year, but trust planning can help through an efficient spend-down of assets as well as reappropriating where possible in order to qualify for assistance through MassHealth. 

You may want some of your assets to keep making money for your beneficiaries. In that case, you will need to consider how your real estate, brokerage accounts, royalties and retirement accounts will be managed, and by whom, and ensure that arrangements are made to have the people you know are best qualified do the job.

Deciding to create a trust is only the first step. The next step is determining which kind of trust suits your individual needs — living, testamentary, revocable and irrevocable are some of the major categories of trusts that can be established depending on what works best for your particular situation. 

A properly drafted trust can take care of your digital assets, too. It can ensure that your electronic property, like your computer hard drive, digital photos, data stored in the cloud and online accounts (including social media) are managed in accordance with your wishes. You may want to designate a tech-savvy trustee for these kinds of assets.