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Wills, Trusts, and Estate Planning

Estate planning is not just for “the wealthy,” it is for everyone. Depending on your assets, your family situation and what your testamentary wishes are, a simple estate plan such as a Will, Healthcare Proxy and Durable Power of Attorney may be just fine or a more complex plan including one or more Trusts may be in order. The key is everyone needs an estate plan, and if you have minor children you don’t have the luxury of time – you need to put a professionally prepared plan in place now.

If you die without a properly prepared and executed estate plan, the Commonwealth of Massachusetts will impose a plan, but you probably won’t like it. The state will also decide who will become guardian of your minor children. Can you imagine someone who has never met you or your children deciding who will raise them if you are not here?

For affluent individuals, in addition to guardianship issues the focus is often on asset protection and preservation. While asset protection is also the focus of people who don’t have significant wealth, they have the additional focus of trying to make sure their loved ones have enough funds available to cover their needs.   Proper estate planning can be even more critical for families with modest assets, because they can afford to lose the least.

Your estate is comprised of everything you own including your home, the possessions in it, your car, your investments, your bank accounts, any rental property you may own and a business if you have one. No matter how large or how modest your estate is, you and everyone else have one thing in common—you can’t take it with you when you die.

To ensure your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. What you don’t want are a lot of delays, taxes, legal fees or court costs incurred to have your wishes carried out. You also want to protect yourself in case you become incompetent or otherwise unable to manage your own affairs while you are still alive, and chose the people you want to make decisions for you.

A basic estate plan is comprised of three things: a Will, a Durable Power of Attorney and a Healthcare Proxy. The Will is the document that dictates what happens to your estate and minor children if you die. The Durable Power of Attorney and Healthcare Proxy are for when you are alive but unable to manage your own affairs or make medical decisions for yourself. These last two documents give other people you chose the authority to make decisions for you. A Healthcare Proxy also sets forth what type of lifesaving measures you may want under various circumstances.

There are a number of reasons you may want to also consider a Trust: for example, if you or someone in your family has a disability, you have a family member who is irresponsible with money or who may need future protection from creditors or divorce, you have significant wealth or expect a sizeable inheritance, you or your family own a business or you want to avoid probate. Unlike a Will, a Trust doesn’t have to die with you. Assets can stay in your Trust, managed by the trustee you selected, until your beneficiaries reach the age you want them to inherit. Your Trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses, and irresponsible spending.

Other key aspects to estate planning include ensuring any beneficiary schedules for 401(k), IRA, pension and life insurance policies are worded properly, as well as careful consideration of both federal and state laws governing estates. You can have the best of intentions, but a single error can mean insurmountable challenges for your family upon your disability or death.

Putting together the right estate plan for your personal situation can take time and cost some money, but knowing you wishes are clear and that your family will be protected is truly priceless.