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Estate Planning Basics

Estate planning can be a scary and intimidating process to think about and begin, but it doesn’t have to be! It’s best to take a step back, and start with the basics. In this post, we will provide an overview of the basic estate planning documents: Wills, Powers of Attorney, Health Care Proxies, and Living Wills. For information about trusts, including difference between revocable and irrevocable trusts, check out our article, Overview of Basic Trusts and Their Functions.

Depending on your goals, health, and the specifics of your estate (what you have for assets and liabilities – money, tangible property, real estate, life insurance, retirement savings, mortgage, debt, etc.), it is true that a more “complex” estate plan with one or more trusts may be recommended, however, trusts are not necessary for everyone. Even the most basic of an estate plan can help to ensure that your goals are met.


Why Do I Need an Estate Plan?

Some of the most common reasons to prepare an estate plan include:

  • Avoid Probate;
  • Avoid Intestacy (dying without a will) which may not align with your desires;
  • Distribute assets to whom you want – this is especially important in second+ marriage situations;
  • Guardianships/Conservatorships for self or children;
  • Tax Avoidance or minimization;
  • Tax planning for self or beneficiaries – step-up in basis;
  • Leave a legacy – Provide for spouse, children, grandchildren or other family members;
  • Make charitable contributions, and
  • Prepare for potential incapacity or medical needs, including long-term care

Will

Simply put, a will is a document that details your final wishes for your personal and/or real property. In our opinion, a will is the backbone of any estate plan, and is included in all our estate planning packages. If your plan includes a Trust, your will is typically referred to as a “pour-over will” because it ensures that your assets will “pour over” into a previously established trust.

Typically, beyond stating who you want to receive your personal and real property upon your death, there will be clauses stating:

  • Whom you wish to appoint to be your personal representative (commonly known as the executor);
  • How you wish to deal with debts and taxes;
  • naming a guardian for your yourself or you children, if necessary (this is especially important for young couples with children);
  • Providing for pets (note that pets are considered to be personal property and in some cases there have even been custody battles over pets), and
  • Deciding whether to require a surety with or without a bond, among other things.

It should be noted, however, that a will on its own will not avoid probate. For more on Massachusetts probate, check out our article Massachusetts Probate: What is it, and When is it Necessary to File.

It should also be noted that a will is not private. Upon death and filing a probate matter, wills become a public record as a part of the probate record. This means that anyone can walk into a Probate and Family Court clerk’s office, request a file, and read through a will. If more privacy is desired, a trust plan may be more appropriate, as generally, trusts do not become public records. Even though pour-over wills become part of the public probate record, they contain less information about specific distributions, thus affording more privacy.


Power of Attorney

A Power of Attorney (“POA”) is a legal document in which a person (“Principal”) appoints an Agent or Attorney-in-Fact to handle financial, legal, and sometimes medical, responsibilities on behalf of the Principal. Effectively, the Attorney-in-Fact steps into the shoes of the Principal. A Principal can also appoint a Guardian and/or Conservator should the need for one arise.

It is important to make sure the POA is made “durable,” meaning that the Power of Attorney will remain in effect until the death of the Principal, otherwise the Agent’s/Attorney-in-Fact’s power is immediately revoked upon the Principal’s incapacity or incompetency.

Other considerations revolve around whether the power immediately goes into effect, or whether it is “Springing,” which means the POA only takes effect upon the incapacity of the Principal.

Typically, we recommend a POA become effective immediately because in emergency situations when it is necessary for an Agent to use the POA, a delay will occur due to the need for doctor verification of incapacity, and because many financial institutions will not accept a springing POA because they do not want the responsibility of determining whether the Principal is actually incapacitated, even with a doctor note, or the exposure that may come from making the incorrect determination. This is why it is extremely important to appoint someone trustworthy as an Attorney-in-Fact!


Health Care Proxy

In a Health Care Proxy, sometimes referred to as a Power of Attorney for Health Care Decisions, an individual (“Principal”) appoints an agent to make medical decisions on their behalf when they are incapacitated and/or when a doctor determines that the Principal is unable to make or communicate medical decisions on their own.

Some of the powers typically conferred upon a Health Care Agent include, but are not limited to, the power to:

  • Obtain and review medical records and information;
  • Talk to doctors about the Principal’s medical condition(s);
  • Authorize admission and discharge from medical facilities;
  • Consent to or withhold certain medical procedures and treatments; and
  • Do anything Principal could do as if it were the Principal themself.

Living Will

A living will is a document which outlines your end-of-life health care wishes if you are to fall terminally ill, and cannot make these decisions on your own. Living Wills detail which treatments you want, and those you do not, including whether you want your life to be artificially prolonged, when a determination is made by your doctors and/or other health care providers that you are in a permanent vegetative state and are unlikely to recover, or you are at the end of a terminal illness.

Although Living Wills are not legally binding in Massachusetts, meaning that doctors and medical professionals are not legally required to follow their instructions, they are nevertheless an essential part of an estate plan because they provide your health care agent, family, clergy, doctors, and other health care providers, with clear evidence and guidance of the treatment methods you desire, and those you do not. These documents are highly customizable, and as such, can be tailored to say almost anything someone may want.

Living will language may sometimes be added into a Health Care Proxy, but we have found that most individuals prefer to keep these advance directives separate from their Health Care Proxy as they may wish to change their minds later, and not have these directives on file at their medical facilities at all times. Think of a living will as a set of instructions for your health care agent.


For a personalized review of your current estate, schedule a free consultation to discuss estate planning options, and determine what plan will be best for you and your family.


No information in this blog post is to be construed as, nor is intended to be, legal or tax advice. Consult with competent legal counsel and/or tax professionals prior to taking any action. Do not rely on any information contained in this blog post as the law changes from time-to-time and this blog post may not be updated to reflect those changes.

© Zuccaro Law, LLC. All Rights Reserved.

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