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While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones of the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.
PROVIDING FOR INCAPACITY
If you become incapacitated, you won’t be able to manage your own financial affairs. Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing each and every penny. If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. A will does not take effect until you die and a power of attorney may be insufficient.
In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care. The law allows you to appoint someone you trust - for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a Health Care Proxy. The Health Care Proxy is a document in which you can also express your wishes that in the event that there is no reasonable expectation of your recovery, you do not want to be kept alive by artificial means or heroic measures. This document also states whether or not you wish to be an organ donor.
Another document that we draft for our clients is an "Authorization for Release of Your Protected Health Information." It is a document made necessary by the recent passage of the federal HIPAA law governing the release of your private medical information. This document authorizes your doctor and other medical facilities that you utilize to release your health information to certain designated persons, including to the persons you name in your Health Care Proxy. Although I include a similar authorization in the Health Care Proxy that I draft, this separate document is more comprehensive and ensures that the authorization continues after your death.
Another document that we draft is called a Declaration of Final Instructions. This document ensures that your family is aware of your final wishes upon your death, including such choices as whether or not you wish to be buried or cremated, your desire for a religious service or some other type of memorial service, and the like.
AVOIDING PROBATE
If you leave your estate to your loved ones using a will, everything you own will pass through probate. The process is expensive, time-consuming and open to the public. The Probate Court is in control of the process until your estate has been settled and distributed. If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled. It is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate. Your surviving spouse may be forced to apply to the probate court for needed cash to pay current living expenses. You can imagine how stressful this process can be. With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, inexpensive and private.
We suggest the use of a Revocable Trust, or Living Trust, to eliminate probate.
PROVIDING FOR MINOR CHILDREN
It is important that your estate plan address issues regarding the upbringing of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters. You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short duration of time. A contingency plan should provide for persons you’d like to manage your assets as well as the guardian you’d like to nominate for the upbringing of your children. The person, or trustee in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances. Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law. Even if you are lucky enough to have the person or persons you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children.
Our firm drafts what is called an Emergency Guardianship Proxy that designates the persons whom you wish to act as Temporary Guardian of your children. This document is useful for those times when you are either traveling without your child or if both parents become incapacitated and are unable to care for them.
PLANNING FOR DEATH TAXES
Whether there will be any federal estate tax to pay depends on the size of your estate and how your estate plan works. Massachusetts has its own separate death tax as well. There are many well-established strategies that can be implemented to reduce or eliminate death taxes, but you must start planning process early in order to implement many of these plans.
CHARITABLE BEQUESTS – PLANNED GIVING
Do you want to benefit a charitable organization or cause? Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how your planned giving plan is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays.
Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family in case something should happen.
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With offices in Princeton and Waltham, Massachusetts, Carrie Dolmat-Connell assists clients with Estate Planning, Wills and Trusts, Elder Law, Medicaid Planning, Special Needs Planning, LGBT Planning, Special Needs Trusts, Pet Trusts, Asset Protection, Probate and Estate Administration, Business Law, Planning for Medical Professionals and Residential Real Estate in East Princeton, Jefferson, Sterling, Hubbardston, Rutland, Westminster, Holden, West Bolyston, Leominster, Fitchburg, Lancaster, Lexington, West Newton, Babson Park, Arlington Heights, Waterown, Brookline Village, Waverly and Boston in Worcester County, Middlesex County, Norfolk County and Suffolk County.
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