FAQs

Do I Need Estate Planning?

  1. What is estate planning?
  2. What is involved in estate planning?
  3. Who needs estate planning?
  4. What happens when I die and don’t have a Will?
  5. What is included in my estate?
  6. What is a will?
  7. What is a revocable living trust?
  8. What is probate?
  9. What are alternative beneficiaries and can how can I change them?
  10. Who should be my executor or trustee?
  11. What should I do for my minor children if I die unexpectantly?
  12. When does estate planning involving tax planning?
  13. Does the way in which I hold title make a difference?
  14. Are there any other ways to leave property?
  15. What happens if I become unable to care for myself?
  16. Who should help me with my estate planning documents?
  17. Should I be aware of promoters of financial and estate planning services?
  18. How much does estate planning cost?
  19. How do I find a qualified lawyer?

1. What is estate planning?

Estate planning is a method to decide how you intend to use your assets today, tomorrow and when you die. It involves the property that you currently own and may acquire. It involves the possible needs you may require if unable to care for yourself. It involves the decision of where and who shall receive your assets when you die.

What Estate Planning Can Do For You:

  • The ability to decide who and how your assets will be given when you die.
  • The ability to decide who can make medical decision for the care you receive if unable to make those decisions yourself.
  • The ability to decide how your assets will be used during your lifetime if unable to make those decision yourself.
  • The ability to decide who and what other individuals can legally handle your personal affairs if you are unable to do so.

One of the most common myths of estate planning is “All that I need is a Will.” Estate planning involves business, tax, financial and medical decisions as well. A will is just a small part of the overall picture.

This is an 18 week e-course to help you understand the estate planning process. There is no cost or obligation to receive this course. The purpose is to provide understanding of how estate planning can help you control what you worked so hard to get.

We appreciate your feedback. If at any time you have suggestions for topics, ideas or other questions not addressed in this course, please call (508) 852-7800 or mail at jack@jackmorrison.com.

If you have any questions or want further clarification of the topic discussed, call Attorney Jack Morrison @ (508) 852-7800 and call for your FREE 15 minute telephone consultation. Just mention that you are receiving the e-course and we will schedule the time to talk.

2. What is involved in estate planning?

One of the first considerations when deciding on an estate plan is gathering an inventory of what you currently have. In doing so, below are 8 questions you need ask yourself:

  1. What personal property – assets- (things that your own, cars, boats, home furnishings, etc) that you current own and what are they worth if you sold them today?
  2. What real property – houses, 2nd homes, vacations homes, time shares) do you currently own and what are they worth if you sold them today?
  3. If you have children under the age of 18, who would care for your children when you die?
  4. Who would your trust that is responsible to carry out your wishes when you die?
  5. Who do you want to leave your assets to when you die?
  6. How do you want to estate to be handled when you die?
  7. Who do you want to make medical decisions or carry out your wishes when you are unable to made such decisions yourself?
  8. Who do you want to be responsible for your financial affairs, i.e. paying bills, chasing checks, moving money from one account to another, etc. when you’re unable to make those decisions yourself.

These questions are just a start. Estate planning is like building a house. A strong foundation make for a strong, durable, secure home. Once you’ve answer these questions, you have the foundation for strong financial future.

Just like building a house, you need a skill professional to build your estate plan. A lawyer who has experience in need building your secure, safe, financial future. Attorney Jack Morrison can help you assemble your estate plan. Call (508)852-7800 for a FREE 15 minute chat on What You Need To Do To Begin An Estate Plan. The call is FREE.

3. Who needs estate planning?

You. If you are searching for information on whether you need an estate plan, I would say, you need one.

It’s easier for me to answer the question, Who Doesn’t Need An Estate Plan?

If you don’t care what happens to your assets when you die,

If you don’t have ANY assets with equity: house, car, checking account, savings account, retirement, etc.

If you want to create havoc between and among your family after you die?

If you answered yes to any of the above three questions, use your mouse and click off this website, You’re not a candidate for estate planning. Unless you change your ways, don’t waste your time and/or money. Spend it all before you die. If there is nothing left, there’s nothing to fight about.

For everyone else. Welcome.

Two approaches.

One Scenario – Estates with assets of $1,000,000 and BELOW.

In most of these cases, the estate plan consists of a document to direct how your assets will be distributed when you die, a document appointing someone to make health care decisions when you’re unable to do so, and a document to direct someone to contact legal affairs on your behalf, and protection from creditors forcing you to sell your home if you owe money.

The other Scenario – Estates with assets of $1,000,000 and ABOVE

In these situations, tax planning becomes important. When you die, you want to minimize the amount of money you pay the government verses the amount of money you leave your family. Tax planning is an important part of estates in this category.

4. What Happens When I Die And Don’t Have A Will?

The myth, that most people fear, is that everything goes to the state when you die without a will. That’s not true. When you don’t have a will, the state distributes your assets to your heirs according to rules of intestate succession.

Intestate success is a method of deciding who gets your assets: spouse, children, parents, siblings would be a general order of who takes in an intestate distribution. Unless the person dies with no known living relative, then the state would ultimate receive the property.

Having an estate plan prevents this problem from arising. You decide where and whom you want your assets to be distributed when you die, not the state.

Everything that you own – have legal title of ownership – is included as part of your estate. So, checking accounts, savings accounts, stocks, bonds, certificate of deposits, personal property, real estate, autos, furniture are all part of your estate.

Other assets you own that may be included are: life insurance proceeds, retirement accounts and inheritances.

Depending upon the total value of your estate, certain “estate taxes” may be assessed. First, identifying the fair market value of each asset you own. Then subtract any loans against them. The remainder is the fair market value of the assets. Although the amount changes, estates over $2,000,000 are subject to both state and federal taxes see # 11.

5. What is included in my estate?

Everything that you own – have legal title of ownership – is included as part of your estate. So, checking accounts, savings accounts, stocks, bonds, certificate of deposits, personal property, real estate, autos, furniture are all part of your estate.

Other assets you own that may be included are: life insurance proceeds, retirement accounts and inheritances.

Depending upon the total value of your estate, certain “estate taxes” may be assessed. First, identifying the fair market value of each asset you own. Then subtract any loans against them. The remainder is the fair market value of the assets. Although the amount changes, estates over $2,000,000 are subject to both state and federal taxes see # 11.

6. What is a will?

A will is a legal document which instructs individuals to do certain things with your assets when you die. These “certain things” include the following:

  • Appoint a person who will gather your assets and distribute them per the instructions you left in your will.
  • Appoint an individual(s) who will care for your minor children until they reach the age of 18
  • Name individuals who will receive your assets.
  • Name individuals who WILL NOT receive your assets.

Most assets in your name alone at your death will be subject to your will. Some exceptions include securities accounts and bank accounts that have designated beneficiaries, life insurance policies, IRAs and other tax-deferred retirement plans, and some annuities.

Such assets would pass directly to the beneficiaries and would not be included in your will

Keep in mind, however, that you must execute your will in the manner required by Massachusetts law. Failure to do so could invalidate the entire will. You should discuss such requirements with a qualified lawyer.

7. What is a revocable living trust?

It is a legal document that can, in some cases, partially substitute for a will. With a revocable living trust (also known as a revocable inter vivos trust or grantor trust), your assets are put into the trust, administered for your benefit during your lifetime and transferred to your beneficiaries when you die—all without the need for court involvement.

Most people name themselves as the trustee in charge of managing their living trust’s assets. By naming yourself as trustee, you can remain in control of the assets during your lifetime. In addition, you can revoke or change any terms of the trust at any time as long as you are still competent. (The terms of the trust become irrevocable when you die.)

In your trust agreement, you will also name a successor trustee (a person or institution) who will take over as the trustee and manage the trust’s assets if you should ever become unable to do so. Your successor trustee would also take over the management and distribution of your assets when you die.

A living trust does not, however, remove all need for a will. Generally, you would still need a will—known as a pour over will—to cover any assets that have not been transferred to the trust.

You should consult with a qualified estate planning lawyer to assist you in the preparation of a living trust, your will and other estate planning documents. Also, keep in mind that your choice of trustees is extremely important. That trustee’s management of your living trust assets will not be automatically subject to direct court supervision.

8. What is probate?

Probate is a court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will.

Typically, the executor named in your will would start the process after your death by filing a petition in court and seeking appointment. Your executor would then take charge of your assets, pay your debts and, after receiving court approval, distribute the rest of your estate to your beneficiaries. If you were to die intestate (that is, without a will), a relative or other interested person could start the process.

In such an instance, the court would appoint an administrator to handle your estate. Personal representative is another term used to describe the administrator or executor appointed to handle an estate.

Simpler procedures are available for transferring property to a spouse or for handling estates in which the total assets amount to less than $100,000. The probate process has advantages and disadvantages.

The probate court is accustomed to resolving disputes about the distribution of assets fairly quickly through a process with defined rules. In addition, the probate court reviews the personal representative’s handling of each estate, which can help protect the beneficiaries’ interests.

One disadvantage, however, is that probates are public. Your estate plan and the value of your assets will become a public record. Also, because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, a probate may cost more than the management and distribution of a comparable estate under a living trust.

Time can be a factor as well. A probate proceeding generally takes longer than the administration of a living trust. Discuss such advantages and disadvantages with an estate planning lawyer before making any decisions.

9. Can I name alternative beneficiaries?

Yes. You should consider alternative beneficiaries in the event that your primary beneficiary does not survive you.

And if a beneficiary is too young or too disabled to handle an inheritance, you might consider setting up a trust for his or her benefit under your will.

10. Who should be my executor or trustee?

An individual that you trust will honor your instructions in your will or trust. The decision is yours. You could name your spouse or domestic partner as your executor or trustee. Or you might choose an adult child, another relative, a family friend, a business associate or a professional fiduciary such as a bank. Your executor or trustee does not need any special training. What is most important is that your chosen executor or trustee is organized, prudent, responsible and honest.

While the executor of a will is subject to direct court supervision and the trustee of a living trust is not, they serve almost identical functions. Both are responsible for ensuring that your written instructions are followed.

Discuss your choice of an executor or trustee with your estate planning lawyer. There are many issues to consider. For example, will the appointment of one of your adult children hurt his or her relationship with any other siblings? What conflicts of interest would be created if you name a business associate or partner as your executor or trustee? And will the person named as executor or successor trustee have the time, organizational ability and experience to do the job effectively?

11. How should I provide for my minor children?

Children under the age of 18, are legally unable to accept an inheritance. Also, such children are legally qualified to care for themselves. Therefore, someone has to be appointed to take such inheritance on behalf of the minor child. The name of that person is a guardian. A guardian can supervise and care for your child (and to manage the child’s assets) until he or she reaches 18 years old.

Again, it’s your decision who will care for your children when you’re not around to do so. It should not be a “choice by committee” of your family if you fail to name a guardian.

Another option is to consider setting up a trust to be held, administered and distributed for the child’s benefit until the child is even older.

12. When does estate planning involve tax planning?

Estate taxes are imposed upon estates that have a net value of $2 million or more. That amount will increase to $3.5 million in 2009. In 2010, the estate tax will disappear completely.

Then, unless Congress passes an extension, the exemption will revert back to $1 million in 2011. For estates that approach or exceed these amounts, significant estate taxes can be saved by proper estate planning, usually before your death or, for couples, before one of you dies.

Keep in mind that tax laws often change. And estate planning for tax purposes must take into account not only estate taxes, but also income, capital gains, gift, property and generation-skipping taxes as well. Qualified legal advice about taxes and current tax law should be obtained from a competent lawyer during the estate planning process.

13. Does the way in which I hold title make a difference?

Yes. What you own and how you hold legal title makes a difference.

For example, if you are married and hold property as tenants by the entirety, this means that upon death of one spouse, the other spouse “legally acquires” the deceased spouse’s interest. The surviving spouse owne the property 100%.

If two people own a home and hold property as tenants-in-common, a different result occurs. When one of them dies, their respective share “passes per their estate.” This means that the surviving property owner has a ½ interest in the property with the estate of the deceased person. If you don’t like the family of whom you own property, you must make sure that this situation does not occur.

The three ways to own title to property in Massachusetts are:

Tenants-in-Common. When assets are named as tenants in common, upon death of one tenant, their respective share is passed on through their estate- their will.

Joint Tenants with rights of survivorship. When assets are named as joint tenants, upon death of one of the joint owner(s), their respective share(s) is (are) distributed to the remaining joint owner(s). There is no deed required to transfer title. Simply recording a death certificate confirms that title has vested in the survivor.

Tenants by the Entirety. Can only be titled when the individuals are legally married. Similar to joint tenants, upon death of one of the owners, the survivor is the 100% owner of the asset. Again, no deed is required to transfer title. Just a certified copy of a death certificate validates the transfer.

14. Are there other ways of leaving property?

Yes. Certain kinds of assets are transferred directly to the named beneficiaries. Such assets include:

  • Life insurance proceeds.
  • Qualified or non-qualified retirement plans, including 401(k) plans and IRAs.
  • Certain “trustee” bank accounts.
  • Transfer on death (or TOD) securities accounts.
  • Pay on death (or POD) assets, a common title on U.S. savings bonds.

Keep in mind that these beneficiary designations can have significant tax benefits and consequences for your beneficiaries—and must be carefully coordinated with your overall estate plan.

15. What happens if I become unable to care for myself?

You can help determine what will happen by making your own arrangements in advance. By executing a Health Care Proxy, you appoint an individual to carry out your wishes when you become unable to do so.

You could transfer your assets into trust. The trustee will provide the necessary management of those assets held in trust. You should also consider setting up a durable power of attorney for property management to handle limited financial transactions and to deal with assets that may not have been transferred to your living trust. By doing this, you designate an agent or attorney-in-fact to make financial decisions and manage your assets on your behalf if you become unable to do so.

And by setting up an advance health care directive/durable power of attorney for health care, you can also designate an attorney-in-fact to make health care decisions for you if you ever become unable to make such decisions.

In addition, this legal document can contain your wishes concerning such matters as life-sustaining treatment and other health care issues and instructions concerning organ donation, disposition of remains and your funeral.

Both of these attorneys-in-fact lose the authority to make decisions on your behalf when you die.

If you have not made any such arrangements in advance and you become unable to make sound decisions or care for yourself, a court could appoint a court-supervised conservator to manage your affairs and be responsible for your care.

The court’s supervision of the conservator may provide you with some added safeguards. However, conservatorships can also be more cumbersome, expensive and time-consuming than the appointment of attorneys-in-fact under powers of attorney.

In any event, even if you appoint attorneys-in-fact who could manage your assets and make future health care decisions for you, you should still document your choice of conservators in case a conservatorship is ever necessary.

16. Who should help me with my estate planning documents?

  • Can I do it myself? Yes. It is possible for a person to do his or her own estate planning with forms or books obtained at a stationery store or bookstore or from the State Bar. At the very least, a review of such forms can be helpful in preparing you for estate planning. If you review such materials and have any unanswered questions, however, you should seek professional help.
  • Do I need a professional’s help? It depends. If you do seek advice, keep in mind that wills and trusts are legal documents that should only be prepared by a qualified lawyer. Many other professionals and business representatives, however, may become involved in the estate planning process. For example, certified public accountants, life insurance salespersons, bank trust officers, financial planners, personnel managers and pension consultants often participate in the estate planning process. Within their areas of expertise, these professionals can assist you in planning your estate.

The State Bar urges you, however, to seek advice only from professionals who are qualified to give estate planning advice. Many professionals must be licensed by the state.

Ask the professional about his or her qualifications. And ask yourself whether the advisor might have an underlying financial incentive to sell you a particular investment, such as an annuity or life insurance policy. Such a financial incentive could bias that professional’s advice.

Unfortunately, some sellers of dubious financial products gain the confidence and private financial information of their victims by posing as providers of estate or trust planning services.

17. Should I beware of “promoters” of financial and estate planning services?

Yes. There are many who call themselves “trust specialists,” “certified planners” or other titles that suggest the person has received advanced training in estate planning.

If if sounds to good to be true, then trust your instincts. Massachusetts is experiencing an explosion of promotions by unqualified individuals and entities which only have one real goal—to gain access to your finances in order to sell insurance-based products such as annuities and other commission-based products. To better protect yourself:

  • Consult with a lawyer or other financial advisor who is knowledgeable in estate planning, and who is not trying to sell a product that may be unnecessary—before considering a living trust or any other estate or financial planning document or service.
  • Ask for time to consider and reflect on your decision. Do not allow yourself to be pressured into purchasing an estate or financial planning product.
  • Know your cancellation rights. Massachusetts law requires that sellers who come to your home to sell goods and services (not including insurance and annuities) that cost more than $25 must give you two copies of a notice of cancellation form to cancel your agreement. You, the buyer, may cancel this transaction up until midnight three business days later. You have 30 days to cancel insurance and annuity transactions.
  • Be wary of organizations or offices that are staffed by non-lawyer personnel and that promote one-size-fits-all living trusts or living trust kits. An estate plan created by someone who is not a qualified lawyer can have enormous and costly consequences for your estate. Do not allow yourself to be pressured into a quick purchase.
  • Be wary of home solicitors who insist on obtaining confidential and detailed information about your assets and finances.
  • Find out if any complaints have been filed against the company by calling local and state consumer protection offices or the Better Business Bureau.
  • Insist on the person’s identification and a description of his or her qualifications, education, training and expertise in estate planning. Also, keep in mind that legal document assistants are not permitted to give legal advice. And paralegals must work under the direct supervision of a lawyer. (As a precaution, ask to speak directly to the supervising attorney if you are not given an opportunity to do so.)
  • Always ask for a copy of any document you sign at the time it is signed.
  • Report high-pressure tactics, fraud or misrepresentations to the police or district attorney immediately.

18. How much does estate planning cost?

It depends on your individual circumstances and the complexity of documentation and planning required to achieve your goals and objectives.

The costs may vary from lawyer to lawyer. Generally, the costs will include the lawyer’s charges for discussing your estate plan with you and for preparing your will, trust agreement, power of attorney or other necessary legal documents. Some lawyers charge a flat fee for estate planning services.

Others charge on an hourly basis or use a combination of both types of fees.

19. How do I find a qualified lawyer?

If you do not know a lawyer who is qualified to help you with your estate plan, ask someone whose judgment you can trust—a friend or employer, for example. Or call a local State Bar-certified lawyer referral service.

Most of these services offer half-hour consultations for a modest fee. Attorneys who are members of certified lawyer referral services must carry insurance, agree to fee arbitration for fee disputes, meet standards of experience and be State Bar members in good standing.

If you do decide to hire a lawyer, make sure that you understand what you will be paying for, how much it will cost and when you will be expected to pay your bill.