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what is estate planning?
There are many legal documents involved in estate planning, including Last Wills and Testaments, Revocable Living Trusts, Irrevocable Trusts, Special Needs Trusts, Testamentary Trusts, Durable Powers of Attorney, and Health Car Powers of Attorney, and HIPPA Authorization documents. New Plymouth and Cape Cod estate planning clients often say that they do not have an estate plan. For those who lack an estate plan, their estate will be distributed after death according to the intestacy laws of Massachusetts’s. This can be extremely problematic in many instance and of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of the State’s estate plan with your own and can allow you to minimize estate taxes, avoid probate court, and protect your children's inheritance from creditors, divorce, and lawsuit. It is important to work with an attorney who specializes in estate planning when setting up these documents.
revocable living trusts
There are may be many advantages to establishing a trust, including avoiding probate court, minimizing estate taxes, and asset protection. Many believe that if they have a Last Will a Testament they will be able to avoid the probate court process, but that is not true. Probate is a court process that takes place in order to determine who will administer the estate of a decedent and who will receive the decedent's estate. One way to avoid your assets having to pass through probate court after your death is by setting up and funding a trust during your life time. In most cases, assets owned in a revocable living trust will pass to the beneficiaries of the trust immediately upon the death of the trust maker(s) with no probate required. Certain trusts also may result in significant tax advantages both for the trust-maker and the beneficiaries. Should your estate be more than the Massachusetts estate tax exemption (currently $1 million in 2021), it is important to establish a trust that can shelter your estate from estate tax. Trusts can also be used to protect assets from creditors and to ensure that your assets stay in your blood-line. In the case of underage beneficiaries or beneficiaries unable to manage their own assets, trusts can provide for someone else to manage and invest property for the trust maker(s) and the named beneficiaries.
LAST WILL AND TESTAMENT
A Last Will and Testament is a legal document that communicates how you want your assets distributed upon your death. It also nominates an executor for your estate who will be responsible for administering your estate at your death. If you have children under the age of eighteen, your Last Will and Testament will nominate a legal guardian for your children. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed to. Without a Will, you are leaving it up to the court to appoint a guardian for your children. You are also leaving the court to determine who will manage your underage child's inheritance on their behalf. Many believe that a Will automatically transfers ownership to their beneficiaries, however this is not correct. A will does not help an estate avoid probate and as a result, a probate court process will need to occur before any assets can be distributed to the beneficiaries. Creditors have one year from date of death to make claims and as a result, assets should not be distributed to the beneficiaries prior to one year from date of death. Furthermore, a Last Will and Testament that is filed with a court is public record and will be available to anyone to read.