One estimate is that 68% of American adults have made no provision at all for managing their assets after they die. There is something about planning for your death that seems to put off many people, even though planning the next summer’s vacation or even a night out with friends is looked forward to with relish!
While most Americans have a vague idea about what is meant by a Will, and know that it in theory it is a good idea to make one, they are less aware of what is meant by estate planning. Making a Will, in fact, is only one aspect of estate planning, albeit an important one. So what is estate planning and how does making a Will fit into it?
What is meant by estate planning?
An ‘estate’ is simply a legal term for the assets you possess and which, when you die, will preferably be distributed to those who you want to benefit from them. Basically, if you do not do any estate planning well before your death, this is left to your surviving relatives to try and sort out. This can mean a lot of hard work, and may lead to conflict amongst those who may have thought that they would become beneficiaries.
What happens if you have no estate plan?
If you die without planning how your estate will be dealt with, then under Massachusetts law, you will have died intestate. The court will then decide who to give away your assets to, based on a standard hierarchical formula. If you have no surviving children, then all your assets will be given to your spouse. If you have a spouse and children, then half of the assets will go to your spouse and half divided up equally between your children. Other relatives will inherit your estate if you have no spouse or children, depending on how closely related they are to you.
You can see how important it is to plan in advance how your assets should be distributed. Let’s say you separated from your spouse ten years ago without having a divorce and have been living with another partner whoyou love, and who is dependent on you financially. If you die intestate, your assets will be given to your spouse and not to your partner.
The components of estate planning
When you make a plan for your estate, it becomes much more of a holistic exercise than just making a Will. Many people don’t just suddenly pass away. They get older and often their faculties deteriorate. They may find that at some stage they become less and less capable of making logical or sound decisions about their finances and everyday life. Millions of older Americans may spend their last few years in a nursing home. Because there is a good possibility that you will need help in making decisions about your assets as you reach older age, you will need more than just a Will to help you make financial decisions. This is what estate planning is all about. Below are some key documents that are prepared in a good estate plan.
- Last Will and testament
This is the document that specifies who gets what of your assets once any debts and taxes have been paid. Only you know who you want to leave your assets to. You are called the testator and you should appoint an executor to make arrangements for your Will to be acted upon.
The sooner you make a Will, the better, as you never know whether you could suffer some kind of accident or die from an unexpected illness. You can always change your Will once the first one has been made. You will want to leave your Will, once made, with a lawyer, for safe keeping. An estate lawyer can also help you prepare a Will. The advantages of this is that the clearer and the more complete the Will, the easier it will be for the executor. It may also simplify the process of probate, the period a court mandates before a Will can be disbursed. The lawyer can also help by explaining clearly to your chosen executor what their responsibilities as an executor are. The lawyer can also help you arrange your finances before you die, so that the beneficiaries of your Will are not taxed too heavily.
- Durable Power of Attorney
Appointing someone you can trust, usually a close family member or good friend, to act as Power of Attorney is sensible, as this person can help to manage your financial affairs if and when you become too incapacitated physically or mentally at some point in your life before you die.
- Living / revocable trust
A revocable trust is an arrangement that holds and manages your assets on your behalf. It holds in trust the assets, or part of your assets, until such time that you die, then the trust distributes the assets to whoever is named in your Will. A revocable trust is particularly valuable if you become incapacitated before death.
- Healthcare proxy (also called a healthcare agent or healthcare power of attorney)
By appointing a healthcare proxy, you are delegating decision making about your health care needs if and when you are no longer able to make decisions yourself. By appointing such a person, you automatically give them the right to access your medical records.
- Personal property memorandum
This is a document in addition to the Will and can be used when there are small but valuable items that you personally want passed on to particular people after you die.
- Living Will
A living Will specifies your end of life requirements rather than leaving these sorts of difficult decisions solely to your healthcare proxy.
Specific rules for a last Will and testament in Massachusetts
There are some specific rules in Massachusetts for a last Will and testament:
- Testators must be aged 18 or older.
- Testators must be capable of understanding what they are including in their Will.
- The testator must sign the Will or by someone else on his/her behalf in the presence of the testator.
- The Will must be in writing.
- The Will should be signed by a minimum of two witnesses who are not beneficiaries named in the Will.
- An oral Will can be made by a mariner while at sea or by someone in the armed forces on active service.
- A Will can be changed at some point later than when it was first made by codicil;
- A Will can be revoked by changing the Will to a new one or by destruction of the document by the testator or by someone else in the testator’s presence as long as the testator is of sound mind.
Use an estate lawyer to help you with your estate plan
Whether your assets are modest or extensive, you will want to make it easier for those you love and leave behind when you die. The best way to do this is to create a sound estate plan with the help of a knowledgeable Massachusetts estate lawyer. In Winchester MA, contact the Law Offices of Richard Mucci at 781-729-3999.