A well-drafted Estate Plan can protect you and help your loved ones answer unanticipated and life-changing questions that arise about your life, death, sickness and the unknown. It gives you peace of mind that when you are no longer able, only those whom you trust have the power to care for you, your loved ones, and your possessions. Our unique approach to having these difficult conversations empowers our clients to make important decisions, and we make the process as collaborative and enjoyable as possible.
What is a Durable Power of Attorney?
A Durable Power of Attorney grants a trusted spouse, partner, friend, relative or advisor the power to handle your finances and manage your affairs. Most people rely on this power when they become incapacitated so that assets can be overseen, bills can be paid, and your family can be provided for without interruption.
Consider the following scenario:
You are hit head-on by a drunk driver and your car is badly damaged. You slip into a coma for six weeks and only an experimental medical treatment will allow you to emerge from your coma unharmed. While your health care proxy determines whether you receive the medical treatment, your agent named in your Durable Power of Attorney has the power to:
- Negotiate with your car insurance company and the body shop to repair your car while you remain unconscious.
- Engage an attorney on your behalf to file suit for your pain, suffering, lost wages and anything else your attorney deems essential while you remain unconscious.
- Negotiate with your health insurance company and advocate for its approval of payment for the controversial treatment so that you come out of your coma.
- Pay your regular monthly bills and others that arise from your health emergency, thus preserving your good credit.
- File your income taxes, manage your investments and oversee the continuity of your business or side hustle.
Thanks to your Durable Power of Attorney, you have not only recovered from your coma, but your car is ready and waiting for you, your claim against the drunk driver is moving through the court system, and you can go back to business as usual with your credit card and mortgage companies and savings. Not bad for someone who has been unconscious for six weeks!
What is a Will?
A Will is a basic estate planning document that allows you to choose who gets your prized possessions and other assets when you pass on.
Without a Will, Massachusetts’ law will determine who gets what.
- If you haven’t a spouse or children, your parents may inherit your entire estate.
- If your parents are not alive, your siblings will split your assets equally.
- If you have a living spouse and surviving parents, your spouse may end up co-owning your home with your parents. Not a problem in theory, but does your spouse want to have to secure an in-law’s consent to refinance, renovate, or sell the house?
- If you have a living spouse and children from a previous marriage, your spouse may end up co-owning assets with step-children and having less to live on than expected.
A Will can name a guardian of your choice to care for your minor children.
Without a Will, a Massachusetts court will determine who raises your children after you die, by deciding what is in your children’s best interests.
If your personal preferences are not made known by your Will, your children could be placed in the care of strangers, a former spouse, or a family member who may not share your values or philosophies. A Will ensures you have a voice in your children’s care decisions after you are gone.
Preparing a Will is easy, but understand that it’s tightly controlled by statute.
Make sure that your Will complies with all of the statuary requirements regarding creation, witnesses, notary stamps and execution. We do!
What is a Trust?
A Trust is a powerful and flexible Estate Planning tool that helps ensure that you are cared for now, while you are still living and that your stuff is promptly distributed according to your wishes at death. Although a slightly more involved option, the benefits of creating a Revocable Living Trust over only a Will, far outweigh the added costs and time, both of which DangerLaw is committed to keeping at a minimum.
Benefits of a Revocable Living Trust vs. a Will
Care During Incapacity
When you create a Revocable Trust, you are usually named as the initial “trustee” and continue to own and control your stuff in that capacity…just like you do now. Additionally, you also choose successor Trustees, people you know and trust, and on whom you can rely to control and distribute your assets when you can’t. If you become incapacitated, your appointed successor Trustee will be able to ensure that your care and financial affairs continue as you would wish them to, without interruption and that you continue to benefit from your assets. Then, when you pass away, this same trusted Trustee will distribute your remaining assets to your designated beneficiaries without the delay of probate.
If you have a Will, but not a Trust, your assets will be subject to the Commonwealth’s Probate process, which is legally required and public. It is also time consuming and expensive. When you create a Trust, most of the information about your estate is kept confidential and your loved ones can gain immediate access to what you have allocated to them.
A revocable or living Trust is a simple and effective means of “death tax” management for married couples.
The current federal estate tax threshold is close to $12,000,000… which means that most of us need not worry about federal estate tax exposure or paying its rate of 40%. . However, currently, Massachusetts has a $1 million estate tax threshold. Therefore, without planning, many of us risk eroding the amount we pass onto our loved ones by Massachusetts’ estate tax. Estate Planning may reduce or even eliminate this cost.
And $1 million is not hard to reach. Add the value of your home, your 401K plan, your IRA accounts and the death benefit of your life insurance policies, and you are likely there.
Only a revocable or living Trust allows a married couple to take full advantage of each other’s $1 million personal exemption, sheltering the maximum amount of asset value from Massachusetts estate taxes and preserving the amount that is passed to your beneficiaries.
Elder Law is a sub-practice within estate planning that focuses on asset protection and preparing for a lifestyle with decreasing capacity and increasing support. In addition to general estate planning, Elder Law considers long term care and transitioning out of independent living and into assisted living or a nursing home facility. The basic elements of this type of planning are a Will, Power of Attorney, Health Care Proxy, and a HIPAA Release. It can be expanded to include trusts and the administration of probate and non-probate assets,
It may also include identifying whom you trust. If you don’t have a relative, friend or neighbor that will survive you and help you smoothly transition to a situation with comprehensive care and safety and carry out your wishes, then let’s brainstorm about a professional individual or company who can give you confidence that these things will be accomplished in line with your preferences.
It may be a care manager, a financial planner, an accountant or even a fun companion. Maybe even a team to make sure you can accomplish many things for as long as you can.
If you have questions about any of these topics, please call for a chat or to meet us and ask questions!
Take this quiz to see if you and your family are legally prepared for life’s surprises.
If, while enjoying a vacation in Hawaii, a nor’easter blows the roof off of your Massachusetts home, do you have documents in place that allow a trusted friend or family member to take steps to repair the damage while you are away…or must you cut your trip short to attend to it personally?
If a sudden accident lands you unconscious and in the Emergency Room, do you have documents in place that allow your spouse, partner or friend to make health care decisions on your behalf? Does your spouse, partner or friend know your wishes about being sustained by life support?
If a sudden accident lands your 18 year old college student unconscious and in the Emergency Room, does your child have documents in place that allow you to make health care decisions on his or her behalf?
If, while enjoying a vacation abroad, your family pet in Massachusetts needs expensive and life saving medical treatment, do you have documents that allow a trusted pet-sitter, friend or family member to get your pet immediate care…or must precious time be lost tracking you down to authorize/pay for it?