What Is Estate Planning And Why Do We Need It?
Estate planning is really just planning for what you want to happen in the event of your death or incapacity. So, that can mean many different things to different people. Obviously, it can mean choosing who you want to manage things from a financial standpoint in the event that you ever pass away, or in the event that you become incapacitated first. It also can mean appointing a guardian in the event that you have minor children. It can mean appointing someone to make healthcare decisions for you in the event that you’re incapacitated. It can also include what you want to happen to your assets upon your death. All of this is considered estate planning.
You need estate planning because most people want to have a say in what would happen in the event of death or incapacitation. Most people want to be able to decide…
- Where their assets are going to go,
- Who is going to take care of their children,
- Who is going to make healthcare decisions for them, and
- Who is going to make financial decisions.
Having an estate plan in place is really just ensuring that your desires are being preserved and ensured should anything unexpected happen to you.
What Happens When Someone Dies In Massachusetts Without Having Proper Estate Planning Documents In Place?
If someone dies without having proper estate planning documents in place, basically the state is going to decide more or less what happens. The law will delineate where the assets are going to go. It will be straightforward and clear, but it isn’t a guarantee that you or your loved ones are going to agree with it.
Essentially, when someone dies without leaving behind an estate plan, the court will be coming in to make the decisions about…
- Who will manage things,
- Who will take your children,
- Who will get your assets, and
- Everything else.
How Often Do You Need To Review Your Estate Planning Documents And Can You Make Changes Or Updates At Any Time?
You don’t need to review your estate planning documents very often. Looking at it every five to ten years is common, but you probably won’t need to make any changes.
You can, however, make changes to your estate planning documents if you decide you want different fiduciaries or beneficiaries than what you originally selected. In general, you will be able to update your documents as frequently as you wish, with a few exceptions.
What Is A Trust And What Is The Purpose Of A Trust?
A basic trust is a distinct legal entity wherein a person, i.e. the trustee, holds assets on behalf of someone else, i.e. the beneficiary. The most common purpose of a trust is to avoid probate.
With a will, you can designate where you want your assets to go but it has no effect until it’s submitted to probate court and the court approves the distribution of the assets. With a trust, because it is a distinct legal entity, you don’t have to go through the court process. The new trustee just comes forward, takes control of the assets, and then can distribute them out to whoever the Trust details. It avoids the entire probate process.
There are also other trusts that do other things, such as minimize the estate tax or for Medicaid planning.
What Are The Most Common Types Of Trusts In Massachusetts, And What Are Their Benefits?
The most common type of trust in Massachusetts is the basic living revocable trust. Sometimes you can also use a basic living revocable trust to minimize the estate tax, but the primary purpose is to avoid probate.
Another type of trust that is sometimes common is the irrevocable life insurance trust, also known as the ILIT. The ILIT is a specific trust designed to hold a life insurance policy. It’s designed such that it can’t be included in the person’s gross estate for estate tax purposes.
The Long Term Care Trust is another common type of trust. This is a trust where you put your assets so that they’re not countable for Medicaid eligibility.
There are, of course, other types of trusts that serve different purposes. Some people use more advanced estate tax minimization techniques.
What Is A Living Trust And How Does It Work?
The technical definition of a living trust is that it is a trust you create while you’re alive, as opposed to a testamentary trust that gets created by your will upon your death. This living trust can be any type of trust but is most commonly a basic trust like the living revocable trust.
The living revocable trust is a basic entity wherein a trustee holds the assets on behalf of the beneficiary. Upon the death of the person who created it, a new trustee comes forward and takes control of the assets to distribute them out to new beneficiaries.
The person who creates the trust is known as the settler and they are the initial trustee and beneficiary of the trust. While they’re alive, they have full control over the trust. They can do whatever they want with the money, change the beneficiaries and the successor trustee, and any assets within the trust. For more information on Role Of Trusts In A Massachusetts Estate Plan, an initial consultation is your next best step.
Do You Need A Middlesex County Estate Planning Attorney Or A Worcester Estate Planning Attorney? Or Can You Do This On Your Own Or With An Online Estate Planning Service?
It doesn’t matter what county you live in, you can hire an estate planning attorney based out of any county in your state. While you can certainly choose to do your estate planning documents yourself or online, it isn’t recommended because there is a lot more to it than there may seem to be.
Online templates for estate planning aren’t very substantive. They don’t include a lot of the provisions that an experienced attorney would want to see in these documents. They also don’t go into enough detail in terms of what you want to happen. They don’t even include any kind of state tax planning. They don’t have any type of probate avoidance included, either.
You could use a very basic template, but you should be aware that you may not really be protected down the road when you don’t fully understand what’s being included and what isn’t. These templates are very commonly not written properly and result in a person’s family members having to go through probate anyway. For more information on Estate Planning In The State Of Massachusetts, an initial consultation is your next best step.
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