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Five Reasons to Plan if your Estate is More than $1 Million

Sue_144pxEstate planning is important for every adult regardless of the size of your personal fortune.  If your estate is more than $1 million, you have additional planning concerns and goals to address.  When you consider the high real estate values in Massachusetts and the recent stock market trends, estates of $1 million or more are not as unusual as they used to be.  Here are five reasons estate planning is especially important for larger estates.

  1. Estate Tax. The Estate Tax is a transfer tax imposed on the value of assets that an individual owns at his or her death and is “transferred” to beneficiaries at death.  There is a federal estate tax that very few people need to worry about since it is only imposed on taxable estates in excess of $5,450,000 (2016 amount).  However, many people are not aware that Massachusetts imposes its own estate tax and that it applies to estates that are $1 million or more.  Since the $1 million exemption is granted to each taxpayer, this means that a married couple has the opportunity to pass on $2 million free of Massachusetts estate tax.  However, they can only do that if they do some estate planning.  Since this planning will save about $100,000 for beneficiaries, it is worth doing, unless of course the Commonwealth of Massachusetts is your beneficiary of choice!
  1. Preserving Privacy. Avoiding probate is a common estate planning goal because clients have heard that probate is expensive and takes a long time (both true!).  There is another important reason to pass your estate to your intended beneficiaries outside of probate and that is to preserve your privacy.  The Personal Representative of an estate must prepare an Inventory itemizing all of the probate assets and a detailed statement called an Accounting reporting all of the revenue received by the estate and all of the disbursements from the estate.  This information must be filed with the Probate Court if the Personal Representative wants to obtain a decree declaring that the Personal Representative has completed the settlement of the estate satisfactorily.  Many Personal Representatives want this blessing from the court as it means that no one can sue the Personal Representative for matters related to the estate settlement.  The issue is that Probate Court records are, for the most part, public records available for perusal by anyone who wants to look at them (think nosy neighbors and greedy relations!).    For those with larger estates (which may include a business, commercial real estate, or rental property), avoiding probate takes on an  additional  benefit in that it makes it much harder for someone to make a claim against an estate or challenge the provisions of a Will.  Estate planning will allow you to pass your estate to your beneficiaries outside of probate, which will reduce the time and expense associate with estate settlement and preserve your privacy.
  1. Asset Protection. Let’s face it – the more you have the more there is to protect.  If you have worked hard your whole life and built an estate of $1 million or more, or if you have had the good fortune to receive an inheritance, you don’t want to lose it to a lawsuit, nursing home, or taxes, and you don’t want your children to lose their inheritance because of any misfortunes or a divorcing spouse.  Assessing the risk to your estate from various “creditors and predators”-’ and exploring the options for minimizing or eliminating those risks is part of the estate planning process.  Just as there are a myriad of risks, there are a variety of ways to address those risks.  Each person’s situation is unique and the perfect solution for one person is not necessarily the right solution for the next person.
  1. Easing the burden for the people who will settle your estate.   One of the most common goals clients have is to make it as easy as possible for their families to settle their estates.  Although not always the case, larger estates are usually more complex to settle.  Putting your affairs in order by making sure your estate plan is up to date, that you have funded your Trust if you have created one, and that your instructions are clear is the best way to ease the burden on those left behind.
  1. Leaving a legacy. For many people, leaving a positive and lasting impact on the world is very important.  Whether it is touching lives as a teacher, performing relief work in a third world country or creating a reading program at the local library, leaving a legacy means creating a lasting impression for good.  A legacy is not about money, but money can allow a person to create a foundation or make a gift that will continue to touch lives long after the giver is gone.

If you have an estate of $1 million or more, you no doubt worked hard to acquire it.  If you haven’t taken steps to preserve your fortune for your intended beneficiaries from risks such as estate taxes, probate costs, and creditors and predators, don’t wait to do so.  Meet with an experienced estate planning attorney who can advise you about your particular situation and help you ensure that your goals are met.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit or call 781/461-1020. 

November 2016