January is a time to make resolutions to do things better in the new year.  Here are five resolutions to make to ensure your estate plan is where it should be in 2019.

1. Resolve to Have an Estate Plan

Most of the clients I meet who do not have a Will, Power of Attorney or other estate plan documents know they should have them, they have just put off this task – sometimes for much longer than they should.  Sometimes it’s the first time they have done any estate planning or spoken with a lawyer about Wills and Trusts. If you are similarly situated, make it one of your goals for 2019 to get an estate plan in place.  A simple plan (Will, Power of Attorney, Health Care documents) is better than nothing at all.  If you have young children or assets in excess of $1 million, a Trust may be advisable to meet your planning goals.  An experienced attorney who prepares Wills and Trusts as the primary focus of their practice will give you options and let you decide which plan is best for you at the moment.

If you already have estate plan documents in place (good job!) resolve to review those documents this year to make sure the documents still reflect your wishes.  If it has been more than five years since the documents were signed or you have had changes in your personal or financial situation, sit down with an estate planning attorney to identify any changes that should be made.

2. Resolve to Get it Done Right

The advice of an experienced attorney is not cheap and estate planning attorneys are no exception.  However, making sure your assets go where you want them to go at your death, managing them properly for young beneficiaries, protecting assets for your family, avoiding probate and saving your beneficiaries as much income and estate tax as possible are important goals.  The way your estate plan is carried out will have a significant impact – positive or negative – on your family or other heirs.  When something is this important, make sure it’s done right. The temptation to draft your own Will or other legal documents is there and is frankly a poor planning option.  In my 31 years of practice I have yet to see a Will drafted by a client that will work as intended, and will not create more problems than it solves.  Proper estate planning is not something that can be done cost-effectively on your own. Seek the advice of an experienced estate planning attorney, not a general practitioner who prepares Wills along with divorce and personal injury law.  Get it done right, and you will have the peace of mind that crossing this task off your list will bring.

3. Resolve to make sure your Beneficiary Designations are Up-to-Date

Many of your most significant assets – life insurance, retirement accounts, annuities – will be paid to a designated beneficiary at your death.  Properly designating those beneficiaries is more complicated than it may appear.   Understanding the implications of certain beneficiary designations is crucial.  For example, this can be especially significant in estate planning for a minor or disabled child. A trust for the benefit of a young or disabled beneficiary can be instrumental in avoiding a lengthy and costly court proceeding to appoint a guardian and in avoiding the loss of public benefits a disabled beneficiary may be receiving. Understanding how distributions from retirement accounts work after the death of the account owner, and how different beneficiary designations will impact the size, frequency and income tax payable on those distributions is crucial to making appropriate designations. Ensuring your beneficiary designations are consistent with your overall estate plan is critical to accomplishing your estate planning goals.

4. Resolve to have Health Care Documents in Place

Much of the estate planning you do is for the benefit of your family or other heirs and will never impact you.  Creating health care documents that reflect your wishes is one area of estate planning that will directly and significantly impact you if you experience a period of illness prior to death.  Designating Health Care Agents to make health care decisions for you if you are unable, making sure the people you want to be able to get information from your physicians can do so and will not be obstructed by privacy laws, and determining your care preferences and communicating them to your Health Care Agents and physicians are all crucial to making sure your health care wishes are carried out.  In Massachusetts, the legal document that we use to make sure these things happen are Health Care Proxies, HIPAA Authorizations and Living Wills. The person you name to make health care decisions for you is called your Health Care Agent. These documents are all part of a complete estate plan, and arguably the most important part from your perspective.

5. Resolve to Make Sure People You Care About Have a Plan Too.

Estate Planning is important for anyone over the age of 18. College-age children and elderly parents should have powers of attorney and health care documents that will allow someone to make financial and health care decisions for them if they are ill or incapacitated.  Parents of young children should name guardians for their children and create a trust to manage assets for young beneficiaries to avoid a child receiving control of an inheritance at age 18.  Parents who will leave a significant inheritance to their children should consider asset protection planning to protect inherited assets from a child’s creditors, divorcing spouse, etc.  Older couples or others with large estates can save their heirs significant estate taxes in Massachusetts with proper planning.  Elderly parents may want to plan to protect assets from long-term care liability.

If a friend or family member needs some inspiration to make estate planning a 2019 resolution, share this article with them.  Happy New Year!

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and currently serves on the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. 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.

January, 2019

© 2019 Samuel, Sayward & Baler LLC

I thoroughly enjoyed watching the Royal Wedding of Prince Harry and Meghan Markle while nibbling on scones and sipping tea in the early hours of last Saturday morning.  In both the back-story and the visuals, it was a fairy tale come to life, which is not something you see every day.  All of that wedded bliss got me thinking, as many things do, about estate planning and marriage.  Here are five important estate planning tips the happy couple should have thought about before tying the knot or should be thinking about now that all that wedding planning is behind them.

1. Basic Estate Planning is for Everyone. If Prince Harry wants to make sure Meghan inherits all of his assets, he’d better create a Will that will ensure that happens.  Your Will does not control assets on which you have beneficiaries designated (see Tip #3 below), but controls assets you own in your individual name – real estate, bank accounts, investment accounts, your car, etc.  If you die without a Will, state intestate law will determine who receives your probate assets.  For example, under Massachusetts law, if you have a spouse but no children, and one or both of your parents are living, your probate assets may be divided between your spouse and your parents, depending on their value.  Creating Powers of Attorney and Health Care Documents are also important to make sure your fiancée or new spouse can participate in financial and health care decisions on your behalf if you become incapacitated (see Tip #4 below).

2. Marriage Impacts the Interpretation of Existing Wills. Hopefully, Prince Harry already had a Will that left the considerable fortune he inherited from his mother to those he wanted to receive those funds at his death – perhaps his brother (although he probably doesn’t need the money), or his adorable niece and nephews, or maybe to the charities he supports.  It is important to remember that although, in Massachusetts at least, your marriage will not automatically revoke an existing Will, it will impact how the Will is interpreted unless the Will was expressly made in contemplation of marriage.  In general, if you create a Will and later marry, your surviving spouse will receive a portion of your probate estate (the assets controlled by your Will) equal to what he or she is entitled to receive under the intestate laws (see Tip #1 above), regardless of what your Will says. The intestate laws are complex and distribution of assets depends upon many factors.  If you have a Will that was created before you were married and are planning to be or have recently been married, sit down with an estate planning attorney to review how your marriage impacts the distribution of your assets under your current Will, and whether any changes should be made.

3. Don’t Forget to Change Your Beneficiary Designations Your Will only controls assets that you own in your individual name. Wills do not control jointly owned assets, or assets for which a beneficiary is designated, such as life insurance policies or retirement accounts unless your estate is named as the beneficiary. For many people, life insurance policies and retirement accounts are a significant portion of their assets. When reviewing your estate plan in light of a new marriage, remember to review the beneficiaries you have designated to receive these assets in the event of your death, and change them if necessary to properly reflect your wishes. Federal law protects a spouse’s right to be named as beneficiary of certain retirement plans, which is important because your marriage may revoke an existing beneficiary designation. Also, if you wish to name someone other than your spouse (for example, a child from your prior marriage) as beneficiary of that type of account, your spouse may need to consent.

4. For Richer, For Poorer, In Sickness and In Health…Powers of Attorney and Health Care Proxies are important estate plan documents that appoint an individual to make financial or health care decisions in the event you are incapacitated or otherwise unable to make those decisions for yourself. If you are newly married, consider creating a Power of Attorney and Health Care Proxy to give your spouse this authority in the event of incapacity. These documents will in most cases avoid a protracted and expensive guardianship or conservatorship proceeding which is necessary when these legal documents are not in place. In addition to decision-making documents, a HIPAA Authorization gives your physician and other health care professionals permission to speak with your spouse or fiancée and is essential if you want that person to have access to information about your medical condition or prognosis in the event of an unexpected medical event. The importance of these documents in avoiding the added stress and delay associated with a court proceeding under what are often difficult circumstances for family members cannot be overstated.

5. Consider a Pre-Nuptial or Post-Nuptial Agreement to Protect Assets. A pre-nuptial agreement is an agreement between two people intending to be married as to how their assets (or certain assets) will be divided between them in the event of a divorce.  It may also address the rights of the surviving spouse in those assets at the death of one spouse.  Although the United Kingdom does not legally recognize pre-nuptial agreements (Prince Harry (and reportedly his brother Prince William before him) have refused to sign pre-nuptial agreements prior to their marriages), courts in that country are beginning to take them into account in dividing assets.  Massachusetts recognizes pre-nuptial agreements as long as they are created within certain parameters.  Massachusetts also recognizes the validity of post-nuptial agreements between spouses, entered into after Pre- or Post-nuptial agreements can be particularly effective in a limited way to ensure that if either spouse receives gifts or an inheritance from a parent prior to or during the marriage, that those inherited assets will remain the property of the spouse who inherited those assets and will not be subject to division in the event of a divorce. Full disclosure of assets (including any prospective inheritance) and separate attorneys for each party are among their requirements for a valid pre- or post-nuptial agreement in Massachusetts. However, if protecting assets a party brought into the marriage or expects to inherit during the marriage is a priority, a pre- or post-nuptial agreement is an important planning option.

Death, divorce, incapacity and estate planning are issues that young couples do not spend a lot of time thinking about.  However, taking the time to craft an estate plan now can go a long way toward ensuring that the happy couple will be prepared for the bumps in the road that will inevitably arise.  Here’s wishing that Harry and Meghan and all of the newlyweds who will marry this summer live Happily Ever After.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. 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.

June, 2018

© 2018 Samuel, Sayward & Baler LLC

As we often tell our clients, although you would like your estate plan to last forever, it probably won’t.  Things change, laws change, family circumstances change, and your estate plan needs to change with it if you want it to continue to accomplish your planning goals.  For most people these goals include making sure the right people are making decisions on your behalf and making sure your assets get where you want them to go with a minimum of delays, estate settlement costs and estate taxes to pay.

Here are five things that can derail even the best estate plan.

1. Change in Marital Status. In Massachusetts, if you create an estate plan when you are married and then get divorced, the divorce will automatically revoke any provision in your estate plan documents that benefits your former spouse or any of his or her relatives (other than children you may have in common), and any beneficiary designations in life insurance or retirement plans that name a former spouse as long as you had the power to change those designations prior to the divorce. A divorce also revokes any nomination of your former spouse or his or her relatives to serve as your Personal Representative, Trustee, health care agent, etc.   This may seem like exactly what you want to happen, and convenient that it happens automatically. However, you need to consider whether your documents address who will serve in these capacities if your spouse is disqualified, or who will receive your assets if provisions in favor of your spouse are automatically revoked.  Also, although the law makes provisions regarding the automatic revocation of beneficiary designations, it is not wise to rely on these provisions, for example, as to life insurance issued by an out-of-state financial institution or a retirement account subject to federal ERISA law.  Reviewing your documents and beneficiary designations and changing them as necessary is always the best approach.  If you create an estate plan while you are single and then get married, your marriage will no longer revoke your Will (as was the case under prior law) but be aware that Massachusetts law gives your spouse a right to receive a certain portion of your estate whether your Will provides that or not.  Make sure you understand what the law provides and create documents that consistent with your intentions if necessary.

2. Death or Incapacity in the Family. Estate plan documents typically name certain individuals – your spouse, children, siblings, friends – to handle certain duties during your lifetime (as attorney-in-fact or health care agent) or after your death (as Personal Representative or Trustee), and also as beneficiaries of your estate.    If someone named in your estate plan documents passes away before you or becomes incapacitated and unable to perform the duties they were nominated to perform, this can be an issue if successors have not been named in the document.  Further, if the person is still alive but is not able to perform those duties appropriately, they may still insist they are able to do so when you (and others) may know they are not a good choice anymore.  A little off topic, but also not uncommon, is the situation where a family member or friend is named as the guardian of minor children in a parent’s Will, but that person is no longer a good choice.  To avoid probate court involvement in designating successor fiduciaries, and to avoid people serving who are no longer appropriate, make sure you revisit the people you have named in your documents from time to time and make changes as needed.  If a beneficiary named in your estate plan is no longer living, make sure you understand how the documents (or beneficiary designations) will operate and where the assets designated for the deceased person will go instead, and make changes if necessary.

3. Beneficiaries with Issues. There are few perfect families, and sometimes a person who is named as a beneficiary of your estate plan will hit a rough patch.  Maybe your child is in a bad marriage and headed for divorce and you are concerned that your daughter’s inheritance may be shared with her estranged husband.  Maybe your favorite nephew has developed an affinity for sports betting and you are concerned about how he will manage an inheritance he may receive from you.  Maybe a family member is an unfortunate victim of the opioid crisis that has hit Massachusetts hard.  Maybe a beneficiary has recently become disabled and you are concerned that an inheritance may disrupt receipt of public benefits.  If any of these situations arise in your family, take another look at your estate plan and update your plan as needed.  It may be that you want to disinherit a troubled individual altogether or retain their inheritance in trust in a way that it will be protected from their troubles but still be available to help them through the rough patches.  An estate plan can do all of this and more, but proper planning is required.

4. Lack of Trust funding and Improper Beneficiary Designations. Even the best estate plan can be derailed if attention is not paid to how assets are owned and how beneficiaries are designated.  It is important to follow your attorney’s instructions regarding these matters to be sure the way in which your assets are owned and beneficiaries are designated is consistent with your estate plan.  In our office, we provide our clients with written trust funding and beneficiary designation instructions.  It is important to make sure the instructions are followed as to existing accounts or assets, and as to any new accounts that may be opened or new beneficiary designations that may be made after your plan is in place.  It is always a good idea to sit down with your estate planning attorney at least every 5 years or so to review asset ownership and beneficiary designations, and make sure they are as they should be.

5. Change of Domicile. Many of my clients (especially after this past winter) think about moving to warmer locations when they retire, even if they want to spend some time in Massachusetts during the year.  It is important that your estate plan documents reflect where you consider yourself to be domiciled – where you intend to make your permanent home.  Although estate plan documents created in Massachusetts will be valid in Florida (or any other state), it is generally a good idea to have your estate plan documents updated when you move to another state. In addition to making sure your documents operate cost effectively and efficiently under the laws of that state, your documents should be written in the state in which you are domiciled.  This is especially important if you are moving from a state (like Massachusetts) that has a separate state estate tax, to a state (like Florida) which has no state estate tax, when your documents will serve as evidence of your intention to be domiciled in your new state.  Further, documents like powers of attorney and health care proxies are often state-specific, and you will want those documents to be used easily in your new state without any question or delay.

Like it or not, an estate plan is not something you can create and forget about.  Family circumstances change, the laws change, and often your goals change.  For these reasons, your plan should be reviewed regularly, revised as needed, and kept up-to-date so it will be ready to do its job whenever and wherever it’s needed.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com or call (781) 461-1020. 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.

April, 2018

© 2018 Samuel, Sayward & Baler LLC