Fundamental Estate Planning

Massachusetts creates an estate plan for you, but is it the one YOU want?


There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Massachusetts’s laws of intestacy. 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.

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Your Last Will and Testament

Your last will and testament is just one part of a comprehensive estate plan. 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. Some things you should know about wills:

  • A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
  • A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate. A will only transfers property owned solely by the decedent that does not transfer via another legal method such as joint tenancy or a beneficiary designation. For example, if you own your home or a bank account joint with another person and then you die, the property automatically as a matter of law becomes the sole property of the surviving joint tenant. The property does not transfer to whom you directed in your will.
  • A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned.  All parents of minor children should document their choice of guardians.  If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.

Trusts: Revocable Living Trusts, Irrevocable Trusts, Testamentary Trusts, Special Needs Trusts, etc.

Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the grantor, the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a revocable living trust, for example, a person may create a trust (the grantor) and name themselves the current trustees (trust managers) who manage the trust assets for their own benefit (trust beneficiary).

Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the grantor(s) with no probate required. Certain trusts also may result in estate tax advantages both for the grantor and the beneficiary. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the grantor(s) and the named beneficiaries. Depending on the provisions in the trust, an irrevocable trust can protect assets from the costs of long term care and a Medicaid lien. If well drafted, another advantage of trusts is their continuing effectiveness even if the grantor dies or becomes incapacitated.

Powers of Attorney

A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. A durable power of attorney needs to be drafted to meet the needs of the maker. Seniors in particular are likely need durable powers of attorneys that contain specialized clauses that make it possible to protect assets should the senior become incapacitated. Under Massachusetts law, a financial institution must honor a durable power of attorney that is presented in good faith and may not refuse to honor a power of attorney just because the financial institution considers the durable power of attorney too old. However, the law is often changing and therefore our office recommends that Durable Powers of Attorney should be updated every five years.

Without a durable power of attorney if you become sick and incapacitated, your family would need to petition the Probate Court to have someone appointed your conservator in order to manage your finances. When a conservator is appointed, the conservator (using your money) must purchase a bond. A bond is an insurance product that guarantees that you will be reimbursed if the conservator steals your money. The court always requires a bond if you own liquid assets such as savings accounts, cd’s, retirement accounts. The bond must be renewed annually. Additionally, your conservator must file an inventory of all that you own with the probate court and report annually to the court detailing what income you received, what expenses the conservator paid, the amount and type of assets that are remaining, etc. This is a very intrusive and burdensome process for your family. The process of getting a person appointed conservator is time consuming (about 3 months), public (the process requires publication of notices of incompetency in the newspaper) and expensive (about $5,000 on average, not including the cost of the bond which is additional). In most cases, conservatorship can be avoided by signing a properly executed Durable Power of Attorney if/while the client still has sufficient mental capacity.

Health Care Proxys (and other Health Care Documents)

In Massachusetts, only an agent named under a properly executed Health Care Proxy or a Guardian may make medical decisions for an incapacitated individual. Anyone over the age of 18 may execute a health care proxy. Under Massachusetts law, the nominated agent has no authority to make decisions until a medical doctor declares, in writing, that the maker is not capable of making his or her own medical decisions. There may only be one health care agent acting at one time. We always recommend that our clients name at least one alternate to make decisions in case your primary agent is not available. You may specify within the document certain restrictions on the agent’s powers, but generally it is impossible to outline how you wish to be cared for under every possible situation.

If you become sick and incapacitated your family and you do not have a properly executed Health Care Proxy, your family would probably need to petition the Probate Court to have someone appointed your guardian. For example, if you had a stroke and could not think clearly, a guardian would be required to make decisions about your medical care. The process of getting a person appointed guardian is time-consuming (about 3 months), public (the process requires publication of notices of incompetency in the newspaper) and expensive (about $5,000 on average). In most cases guardianship can be avoided by signing a properly executed Massachusetts Health Care Proxy at a time when the client still has sufficient mental capacity.

We strongly recommend that our clients execute an advance directive, sometimes also called a living will. This is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. An advance directive is not legally binding in Massachusetts. Rather it is a statement of the maker’s intent and wishes. It is useful to families when making decisions and assists families in communicating the ill person’s wishes to others. An advanced directive is usually much more detailed than a health care proxy. It can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery. It can describe your desires, including where you want to live, who you want to visit with and what activities are important for you to continue to be able to do when you are no longer able to express those thoughts for yourself.

HIPAA Authorization

Another document that goes hand-in-hand with your Health Care Proxy is an HIPAA authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker. Federal law prohibits most medical providers from sharing your private information with anyone. Because your Health Care Proxy is not in effect until a doctor declares in writing that you are incapable of making your own medical decisions, family members may not be able to communicate with your medical team until you become in competent. However, you may want certain loved ones to be able to speak directly to your care providers even before you become incompetent. Also, you may only have one health care agent (decision maker) at one time but you may want more than one member of your family to be able to access your medical information. A HIPAA authorization resolves these issues in most situations.

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