Estate Planning

Estate Planning

Estate Planning

Estate planning is one of the most important tasks facing family members. It can be as simple as preparing a will that provides for the orderly disposition of one’s property, or it can include a trust plan for probate avoidance, minimizing death taxes, and preservation of wealth for succeeding generations.

A basic estate plan should include a will, a durable power of attorney, a health care proxy, a HIPAA authorization, and a homestead exemption.

Below you’ll find a listing of the most common inquiries with regards to Estate Planning.

The Will

Wills are the most common way for people to state their preferences about how their estates should be distributed after their deaths. You would name a Personal Representative to collect and manage the assets, and pay the expenses of your estate. If you have minor children, the will would name a guardian who would have the responsibility to care for your child.

If you don’t have a will, your assets would pass in accordance with your particular state’s intestacy laws.

What Wills Do Not Cover

In general, your will affects only those assets which are owned by you individually at your death. Some assets are not affected by your will, such as:

  • Living trusts. Assets held in a revocable living trust at your death are allocated pursuant to the provisions of your trust, and without a court-supervised probate proceeding.
  • Retirement plans. Retirement plans, such as a 401(k) or an IRA, pass to the beneficiary named on the account.
  • Life insurance. Proceeds from life insurance policies are paid to the named beneficiary on the policy.
  • Assets owned as a joint tenant. Any assets held in joint tenancy will pass to the surviving joint tenant. These assets may include real estate and bank accounts.
  • “Pay on death” or “transfer on death.” Some investment accounts may have beneficiaries named on the account. The names of the beneficiaries are preceded by the words “transfer on death” or “TOD.” Other assets such as bank accounts and U.S. savings bonds may be held in similar form with the names of the beneficiaries’ preceded by the words “paid on death” or “POD.”

Power of Attorney

A power of attorney allows an individual to manage the financial affairs of another during their lifetime.

Health Care Proxy

A health care proxy is a document that appoints another individual to serve as the person’s health care agent when the principal is unable to make health-care decisions.

A Living Will

A living will is not really a will at all. Instead, a living will is a document that expresses an individual’s desire to not be kept alive by artificial means. Living wills are recognized in Florida, but not recognized in Massachusetts. However, they may be useful to family members and physicians regarding your wishes.

HIPAA Authorization

A HIPAA Authorization derives from the Health Insurance Portability and Accountability Act. This document enables you to appoint an agent to have access to your medical records.

There are many reasons to create a living trust, making this property distribution technique a popular choice when creating an estate plan. A living trust allows for the management of your assets during your lifetime and the transfer of those assets pursuant to the terms of the trust without a court-supervised probate proceeding.

Other advantages of trusts include:

  • Easier, more efficient administration of your estate
  • Maintain assets in trust until your beneficiaries attain certain ages that you want them to inherit
  • Creditor protection from beneficiaries’ creditors, spouses, and divorce proceedings
  • Prevents probate court jurisdiction when a minor inherits assets
  • Can be changed or revoked at any time
  • Tax planning to reduce or eliminate state and federal estate taxes

Life Insurance Trusts

Generally, benefits paid under life insurance policies would be included as part of the deceased’s taxable estate. In order to reduce the value of your estate you should consider creating an irrevocable life insurance trust. The life insurance trust would be the owner and beneficiary of the life insurance policy. This would remove the value of the policy from your gross taxable estate.

Long term planning involves developing your ultimate exit strategy from your business. Business owners should understand what will happen to their business after their death. There are a wide variety of business succession techniques that are available to help you accomplish your planning objectives. We will work with you and your advisors to implement various strategies to minimize the impact of estate, gift, and income taxes. We guide personal representatives through the process of administering property in estates.