Estate Planning
Estate planning is a process by which a client and the client's attorney consider alternatives for setting up legally effective arrangements that will meet the client's specific wishes if something happens to the client or to the client's loved ones. Good estate planning is more than just a simple will. Estate planning should minimize potential taxes and fees, and establish contingency plans so that the client's wishes regarding their property and health care treatment are followed in the event they are unable to make decisions for themselves.
On the financial side, a good estate plan coordinates what will happen with your home, your investments, your business, your life insurance, your employee benefits (such as your 401(k) plan), and your other property in the event you become disabled or you die.
On the personal side, a good estate plan includes directions to carry out your wishes regarding health care matters. If you ever are unable to give the directions yourself, someone you select will make decisions about whether you will undergo specific medical procedures and whether you will be placed in a nursing home. They will know when you would want them to authorize heroic measures and when you would prefer they let nature take its course.
Definition of an Estate
The term estate consists of all the property a person owns or controls, whether in his or her individual name, in a partnership, in a joint ownership arrangement, or through a trust, and all other monies that will be generated on the person's death, such as life insurance proceeds. It includes:
- All real property and things attached to it (houses, buildings, etc.);
- All personal property (including automobiles, bank accounts, stocks and bonds, mutual funds, stock options, cash, furniture, jewelry, art, collectibles, etc.);
- All businesses and business interests (sole proprietorships, partnerships, corporations, joint ventures, and the goodwill, inventory, tools and equipment, accounts receivable, and other business property);
- All property over which you have a general power of appointment (i.e., the right to direct who gets someone else's property);
- Life insurance and annuity contracts, pension benefits, IRAs, 401(k) accounts, 403(b) accounts, and other qualified and nonqualified plans;
- All debts and obligations owed to you by others; and
- All claims you have against others, such as for pain and suffering from an auto accident.
Your Estate Plan
The best time to start an estate plan is now. You can only prepare and implement an estate plan when you have the legal capacity to do so, and you never know when you will die or when you might become unable to manage your own financial affairs at some point due to an accident or illness. If you are unable to manage your own affairs or suffer from some other disability that affects your legal capacity, then your estate plan, if you can implement one at all, may be effectively challenged by those who assert that you lacked capacity at the time you signed the documents. Everyone should have an estate plan. It is particularly important that you have an estate plan if you are the parent of a minor child, you have property that you care about, or you care about your health care treatment. We provide estate planning services which are specifically tailored to the needs of each client, representing single individuals to young couples starting a family, to mature couples with grown children to the elderly. Proper planning can ease the transition of assets from one generation to the next, as well as provide for the future of minor children. We draft and prepare all documents necessary to create an effective estate plan, including:
- Simple or complex wills
- Revocable living trusts
- Irrevocable trusts
- Powers of attorney
- Medical directives
- Declaration of Homestead
Our services extend beyond the preparation of legal documents. We will assist you to develop your goals, evaluate your options and select the estate plan tools which best fit your family’s needs. Our firm will work closely with your current personal and financial advisors (such as Accountant and Brokers) to develop a plan specific to your needs. After your estate plan is in place, we will assist you with the administration and management of your plan, and update your plan as your family and business needs change.
Estate Administration
Administration is the process of determining and distributing assets at death. Estate administration is required absent a properly funded trust, in which case a probate proceeding may become necessary. Probate is required, subject to exceptions, even if a will has been executed (testate estate), and where a person left no will (intestate estate). When a living trust was the person's primary estate planning document, and assets were properly titled in the name of the trust during the person's life, trust administration is generally necessary. Assets which have a beneficiary designation, such as life insurance, annuities, IRAs, profit sharing plans, 401(k) plans and other retirement assets, are controlled by the beneficiary designations on file.
Immediately after death, the personal representative, executor or successor trustee must create a list of all assets, determine exactly how they are titled (joint tenancy, individually, in trust, etc.), determine beneficiary designations where applicable, and determine date of death values. All liabilities of the estate must also be determined, and any outstanding bills and expenses must be paid. Ownership of assets at death determines whether they are subject to probate, and how and to whom those assets will be distributed or allocated.
Ownership also determines whether an asset will be included in the taxable estate for death tax purposes. The value of assets at death determines the size of the taxable estate for death tax purposes. It will also determine the income tax basis of those assets in the hands of the beneficiary. This new basis will determine potential gain or loss if the beneficiary should later decided to sell those assets.
The administration process also involves the filing of necessary tax returns, including a final income tax return, a federal estate tax return, if applicable, a Massachusetts estate tax return, if applicable, and a fiduciary income tax return for the estate or trust, and the payment of all taxes.
Administration of an estate can oftentimes be an overwhelming experience for individuals. Our firm is intimately familiar with probate procedure and can ease the burden during an emotionally trying time. Each estate is handled with specialized and individualized attention.
Depending upon your comfort level, our firm can handle the daily tasks involved with administering an estate (from contacting creditors and Social Security to paying bills), or limit our involvement to the preparation of required probate forms, and legal advice. Generally, we are called on to prepare necessary probate documents, attend hearings, and prepare accountings. We have experience is settling estates of all sizes.
In addition, we represent individuals as trustees for testamentary and inter-vivos trust administration. Our firm handles the preparation of trust accountings, provides legal advice to trustees on various trust administration issues, as well as trust litigation services. |
