The Vital Importance of Estate Planning: Protecting Assets, Minimizing Taxes, and Ensuring Your Wishes
Why Estate Planning is Essential: Protecting Your Legacy and Loved OnesDid you know that over half of adult Americans lack a will, and even those with one may not fully grasp its implications? Regardless of your net worth, an estate plan plays a crucial role in avoiding probate, determining guardians for your children, and ensuring your assets go to the right places. Your specific needs can evolve with major life changes, making estate planning a dynamic process.
In Massachusetts, estate taxes come into play if your assets exceed $2 million. Many middle-class families are closer to this threshold than they realize, considering that assets such as life insurance payouts and non-probate assets like homes and retirement funds are included in the calculation. A robust estate plan also safeguards you in times of incapacity. A health care proxy designates someone to make medical decisions when you can't, while a power of attorney empowers a trusted individual to handle legal and financial matters on your behalf. |
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Avoiding Probate and Preserving Assets
Without an estate plan, your assets must undergo Probate Court approval, incurring costs that can consume 3% to 8% of your estate. Moreover, probate proceedings can last up to a year, leaving your family without timely access to crucial assets.
Even if you have a will, assets subject to it must still pass through probate. A comprehensive estate plan, which includes a will and a living or revocable trust, can shield some or all of your assets from this process.
Even if you have a will, assets subject to it must still pass through probate. A comprehensive estate plan, which includes a will and a living or revocable trust, can shield some or all of your assets from this process.
Protecting Assets from Long-Term Care Expenses
Considering your age, planning for long-term care or assisted living expenses can be vital. Traditional health insurance and Medicare do not cover these costs. Without long-term care insurance, you may need to spend your own savings or qualify for assistance from MassHealth/Medicaid.
Several tools, such as transferring real property with a life estate or establishing an asset protection trust, can safeguard your assets. Keep in mind the five-year "look back" period for Medicaid/MassHealth applications, which heightens the importance of considering these estate planning strategies well in advance.
Several tools, such as transferring real property with a life estate or establishing an asset protection trust, can safeguard your assets. Keep in mind the five-year "look back" period for Medicaid/MassHealth applications, which heightens the importance of considering these estate planning strategies well in advance.
Shielding Assets From Estate Taxes
Estate and inheritance taxes are another consideration. In Massachusetts, estate tax applies if your assets exceed $1 million, encompassing various assets like jointly owned real property, life insurance proceeds, and retirement account funds.
For married couples, strategic trust planning can help maximize exemptions and reduce the tax burden. Additional strategies, such as irrevocable trusts and gift planning, are available for unmarried individuals or those with assets exceeding $2 million. Special considerations apply if one spouse is a non-U.S. citizen.
For married couples, strategic trust planning can help maximize exemptions and reduce the tax burden. Additional strategies, such as irrevocable trusts and gift planning, are available for unmarried individuals or those with assets exceeding $2 million. Special considerations apply if one spouse is a non-U.S. citizen.
Ensuring Your Wishes Are Honored
If you pass away without a will, the Commonwealth of Massachusetts will dictate asset distribution. While this may align with your preferences in some cases, many families have more complex situations. You may have children from different marriages, close non-family relationships, or unique distribution goals.
A well-crafted estate plan can ensure your assets are distributed according to your specific objectives, regardless of how intricate your family dynamics are.
A well-crafted estate plan can ensure your assets are distributed according to your specific objectives, regardless of how intricate your family dynamics are.
Protection During Incapacity
Incapacity is not always an end-of-life issue; illness or injury can lead to temporary decision-making challenges. Having a trusted point person for medical decisions and a reliable individual to manage legal and financial matters during such periods is essential for your peace of mind.
Meet Our Estate Planning Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
How We Can Help
We are ready to help. We understand this can be a difficult issue to tackle, so we have designed our process to make it as easy as possible for you to get the plan in place that protects you and your family and accomplishes your goals. You can use the button below to schedule a free information call, or simply give us a call at 781-784-2322.
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