Make Planning for the Future Your New Year’s Resolution
The future is not an easy topic to discuss but a necessary one to ensure that your wishes are carried out. As the saying goes, there are two certainties in life: death and taxes. Unfortunately, if you live in Massachusetts and your gross estate exceeds $2 million, your loved ones will be left holding an estate tax bill after you’re gone. Many Massachusetts residents have considered shipping off to Florida or taking other steps to reduce potential estate taxes.
However, if you’re thinking, “I’m not rich so I don’t need an estate plan,” I want to share several reasons to create an estate plan beyond tax savings. As an estate planning attorney, I work with families from a variety of backgrounds every day to design plans that help maintain control over assets, safeguard privacy, and provide guidance for the care of loved ones in the event of death or incapacity.
If that isn’t enough to convince you, here are ten important reasons to create an estate plan in the new year:
1 – Maintaining Privacy and Avoiding Probate
Having an estate plan can help minimize probate, the legal process where a court oversees the distribution of assets left by a deceased person. The probate process can be expensive, time-consuming, and lead to loss of privacy. With proper planning, you can avoid the delay and cost of probate and keep your estate’s details private.
2 – Protecting Minor Children
Nominating a guardian in the will ensures that any minor children will be cared for by the people you have chosen if both parents die before the child turns 18. Without a will in place that nominates a guardian, the probate court will decide who looks after your minor children without your guidance on the issue. A thorough estate plan will also include a trust to protect assets for the benefit of your minor children, which avoids the need to have a conservator appointed by the court to manage assets for the minor, and the trust can also dictate the age at which the minor receives his or her inheritance (most parents don’t want a child to receive his or her inheritance when they turn 18, which is what would happen without a trust).
3 – Providing for Your Spouse and Other Beneficiaries
An estate plan allows you to make decisions about how your assets will be distributed after your death or incapacity, ensuring your wishes are followed. A properly drafted will and trust ensures that your assets will be distributed to your intended beneficiaries after your death. Otherwise, the applicable statutes will determine who will benefit from your estate, which might be contrary to your own wishes.
4 – Planning for Blended Families
Estate planning can help ensure that your assets are distributed according to your wishes, especially in the instance of a blended family. For example, in a second marriage with children from a prior relationship, a parent will often want to use trust planning to ensure that their children receive a fair share of the assets, rather than being cut out by a surviving stepparent. It is also wise to protect assets in trust for your children in the event of remarriage of the surviving parent.
5 – Special Needs Planning
If you have a beneficiary with special needs, a “special needs trust” or “supplemental needs trust” can be created as part of your estate to ensure that the beneficiary continues to qualify for public assistance such as MassHealth or Social Security and Supplemental Security Income (SSI).
6 – Creditor Protection
By placing a child’s inheritance in trust for the child’s benefit, you may be able to shield those assets from the child’s creditors (including, for example, a divorcing spouse), ensuring that assets are used only for the benefit of your children or grandchildren.
7 – Providing for Pets
You’ve probably seen more dramatic examples of this in the news, like when Karl Lagerfeld purportedly left the bulk of his $300 million estate to his cat, Choupette. While this particular situation may seem absurd, more practical provisions for the care of pets aren’t uncommon in estate planning. If you want to be sure that Fido is well fed and cared for in the event he outlives you, consider the creation of a pet trust.
8 – Planning for Your Incapacity
Through documents like durable power of attorney, health care proxy, and living will and trust, you can designate individuals to manage your assets and make decisions on your behalf if you become disabled or incapacitated.
9 – Charitable Giving
If you wish to make charitable gifts upon your death, there are many ways to incorporate these philanthropic goals into your estate plan. Charities can be named as beneficiaries in a will or trust or as a designated beneficiary on retirement accounts.
10 – Business Succession
If you own a family business that you plan on keeping in the family upon your death, part of your estate plan might involve business succession planning to plan for the death or retirement of a key partner and to make it easier to transfer the business interests to your family members after your death (or to allow the family members to cash out of the business).
It’s important to consult with a knowledgeable estate planning attorney who can provide personalized guidance and help you determine the most appropriate estate planning strategies for your unique circumstances. They can also ensure compliance with state laws and address any unique estate planning needs or concerns you may have.
Categorized: Estate Planning, Wills
Tagged In: estate planning, special needs planning, Trusts, wills
