Most people do not want to think about planning for what will happen if the unexpected occurs, but doing so provides peace of mind that their loved ones will be taken care of after they are gone. Estate planning might sound complex, but it is about controlling your legacy and protecting your loved ones. If you are in Massachusetts, understanding how estate planning can benefit you and your family makes the difference in approaching this critical task. We are here to assist if you find the task overwhelming. Family Legal Partners, P.C. has extensive experience and an in-depth understanding of designing and implementing valuable estate planning strategies in Massachusetts. We offer premier legal services to individuals, families, and small business owners in Franklin, Medway, Medfield, Mansfield, Norfolk, Milford, Hopkinton, and throughout Massachusetts.
Components of Estate Planning In Massachusetts
Trust Documents
Trusts, which come in all different shapes and sizes, should be considered the foundation of any proper estate plan. They are like safety deposit boxes for your assets. You put assets into a trust and then dictate how and when your beneficiaries will receive them. When you establish a trust, you transfer your assets into the trust. Upon your death, these assets are controlled by the terms you’ve set within the trust document. Because the trust owns the assets, they are not subject to the probate process at death. The assets will bypass this time consuming entanglement entirely, which means that the distribution of assets can occur without the delays and public scrutiny associated with the probate process.
Certain types of trusts can also help to avoid or minimize estate tax exposure. For example, an Irrevocable Life Insurance Trust (ILIT) can also be used to exclude life insurance proceeds from your estate, significantly reducing the size of your taxable estate and, therefore, the amount of estate tax that your estate would owe upon your death. In addition, a bypass or credit shelter trust can help married couples maximize their estate tax exemptions, potentially saving a significant amount in federal and or state estate taxes.
Last Will and Testament
Creating a will serves as a safety net to ensure the proper representative is appointed on behalf of your estate and assets are distributed to your trust.. If you have minor children, your will provides for the nomination of their guardians. Without a will, the state of Massachusetts makes these decisions for you, and they might not align with your wishes.
Massachusetts has strict requirements to deem a will legally valid. An invalid will can have devastating consequences. Given the required formalities and risks involved, it is necessary to have an attorney draft this document.
Relying on a will alone (without the use of a trust) will require the probate probate process which can consist of a court involvement of authenticating the will, inventorying the deceased’s assets, paying debts and taxes, and distributing the remaining estate according to the will. If a person dies without a will in Massachusetts, state intestacy laws determine how to distribute the estate. Typically, the estate will pass to the closest surviving relatives, with priorities given to spouses, children, parents, and other relatives. In Massachusetts, an individual can contest a will on several grounds, such as lack of testamentary capacity, undue influence, or improper execution. The Massachusetts Probate and Family Court will then examine the will’s validity.
Remember that a will can be revoked or amended by the testator at any time before death, provided they have the mental capacity to do so. You can amend your will either by creating a new will or through a codicil, which is an amendment executed by the same legal standards as an original will.
Healthcare Directives and Powers of Attorney
While it is certainly not fun to think about becoming unable to make your own decisions, it is crucial to plan for it. This consideration will also provide peace of mind, knowing it is taken care of. Under a healthcare proxy— you will appoint someone you trust to make medical decisions if the event you cannot. An advanced directive (also known as a living will) outlines your wishes for medical treatment if you feel strongly about end of life decisions.
A durable power of attorney is necessary for appointing a person to handle your financial matters — everything from paying bills to making investment decisions.
Federal As Well As The Massachusetts Estate Tax Considerations
Also known as the “death tax,” the federal estate tax is levied on a deceased person’s inherited assets. The estate tax generally only applies to assets over $13.61 million in 2024. The federal annual gift tax exemption is $18,000 in 2024 and $17,000 in 2023. Any amount gifted to someone over that counts against your 2024 lifetime exemption of $13.61 million.
Massachusetts also has an estate tax in addition to the above Federal estate tax. Massachusetts estate tax returns are required if the gross estate, plus adjusted taxable gifts, exceeds the filing threshold as follows:
- For decedents dying on or after January 1, 2016, with a gross estate of more than $1,000,000
- For decedents dying on or after January 1, 2023, with a gross estate of more than $2,000,000.
The above threshold for Massachusetts estate tax is lower than in many other states, so planning is crucial to minimize what your heirs must pay. The good news, however, is that there is currently no state gift tax on transfers made in Massachusetts during one’s lifetime.
Appointing Guardians for Minor Children
Your Will addresses permanent guardianship and who will manage the day-to-day care of your children. It’s even possible to have the guardian be separate and distinct from the Trustee serving under your trust. While permanent guardianship is incredibly important, you must also address who would care for your children in an immediate emergency situation. The Appointment of Agent for Care of a Minor considers temporary guardianship. In the event both parents are simultaneously incapacitated or unavailable, an individual is appointed to take temporary custody of your minor children. Temporary guardianship is generally terminated when either or both parents regain capacity or become available.
Digital Assets
In today’s digital age, we must consider digital assets like social media accounts, online banking, and cryptocurrency. Make sure to include them in your estate plan. Decide who will handle your digital footprint and ensure they have the information to do so effectively.
Review and Update Regularly
Life changes and your estate plan should change too. Marriage, divorce, growing the family, acquiring new assets and moving to a new state are just a few life events that should trigger a review of your estate plan. In Massachusetts, checking in with an estate planning attorney is advisable to ensure your documents are always up to date and in line with current laws.
Conclusion
By taking the above steps, you are not just planning for your future—you are taking care of your loved ones and handling your legacy the way you want. It is worth the effort to try to do it correctly. Family Legal Partners can help ensure you are confident that your loved ones are being taken care of if something should happen to you. You can also feel that your estate will only owe the necessary taxes. Contact our office for an initial consultation.