AN OVERVIEW OF ESTATE PLANNING
This Article is the first in a series of articles that will appear in the Hull Times concerning estate planning. As attorneys, we are often asked, “What IS estate planning?” It’s a good question. Estate planning has become a fairly complicated legal field in recent years. However, all estate plans should include some fundamental documents.
The Basics
At a bare minimum, it is important for every adult to have a Power of Attorney and a Health Care Proxy. It is easiest to think in terms of what these documents actually do: Powers of Attorney relate to your FINANCIAL well being. Health Care Proxies relate to your PHYSICAL well being. Both are important building blocks of any successful estate plan. These documents are especially important because you are still alive while they are put into use. Ideally, these documents serve to act only until you are restored to good health. However, even if you are not restored to good health, the documents should be drafted so that they accurately reflect your own wishes as closely as possible.
Many people may recall the 2005 “right to die” case of Terri Schiavo. This case illustrated the importance of another, less formal, document often known as a Living Will. And, since the passage of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, possessing a document that allows a named person or persons access to your private medical records is almost required to assist your Health Care Proxy in doing his or her job properly . Accordingly, the Living Will and HIPAA directive are stand alone documents that complement the basic documents.
Another simple estate planning tool is the declaration of homestead. Many people are unaware that Massachusetts allows a Massachusetts resident creditor protection on his or her personal residence for up to $500,000 of the home’s equity value per family. To get this protection, the resident must file a declaration of homestead with the local registry of deeds. (For Hull residents, this declaration could be filed at the Rockland division of the Plymouth County Registry of Deeds). While the home is not protected against all creditors, it is protected against most. Additional homestead protection is available to the elderly.
The Will:the essential estate planning document
Wills are the next component of many estate plans. A Will determines, to some degree, who will inherit your assets once you pass away. In Massachusetts, it must be a written document signed in the presence of two Witnesses and a notary. It would probably be difficult to find anyone who doesn’t know what a Will is. Nonetheless, it is surprising to us how many people do not have this essential estate planning document. Often we hear, “I own my house jointly with my spouse, so I don’t need a Will, do I? “ The answer is you should probably still have a Will. While having joint property avoids probate and title does pass to the survivor, inevitably all property is not held jointly. You may have items of personal property that are not considered joint property. You may have jewelry or other sentimental items that you wish to leave to certain individuals who are not your spouse. Alternatively, you may wish to disinherit a family member who might otherwise have a claim against your estate. Wills also name guardians for minor children, and speak to property distribution if your spouse predeceases you. They can also assist your personal representative in making tax elections.
Trusts and advanced estate plans
Trusts represent a final level of complexity to estate planning. While many people do not think that they need trusts, they are often surprised to find what trusts can accomplish. Many people who do not currently have trusts could benefit from having them.
Trusts range from very simple to very complex estate planning documents. There are many different kinds of trusts that serve many different purposes. The purposes of many trusts are probate avoidance and privacy. There are also many trusts whose purposes are to avoid and minimize taxes. Another set of trusts are created to provide asset protection. In the months ahead, we will describe the various components of trusts and the estate plan in much greater detail.
This article is for informational purposes only and does not constitute legal advice. An attorney client privilege can only be established upon meeting personally. The discussion of specific facts and payment and acceptance for a retainer will begin the attorney client privilege.
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