One of the first things I want to know when I meet a new estate planning client is: What are your planning goals? What are you trying to accomplish by seeing me? Depending on their circumstances, clients may want to avoid probate, save estate taxes when they die, make sure their assets will be protected if they require long-term care at the end of their life, or all of the above. But one goal I hear most often from clients is the desire to make things easier for their loved ones after they pass away.

Many of our clients have experienced the death of a spouse or a parent and understand the work involved in wrapping up someone’s affairs after their death. That experience can be markedly different – in a good way – if the person has planned properly and taken steps to be sure everything is in order. If that is the case, significant time, expense and aggravation can be saved.

As we begin to anticipate the Thanksgiving holiday with our family and friends, here are five things those you leave behind will be thankful you did before you get sick or pass away.

1. Make sure your Power of Attorney is Up to Date

Your power of attorney is the unsung hero of your estate plan. A Power of Attorney appoints someone (an “attorney-in-fact”) to make legal and financial decisions for you if you are unable to make those decisions yourself at some point during your lifetime. A Power of Attorney must specifically list the actions you authorize your attorney-in-fact to take on your behalf.

Many people will suffer a period of incapacity prior to death. It is during this time that a well drafted Power of Attorney is crucial. A Power of Attorney drafted 10 or 20 years ago may not be honored by banks or other financial institutions your attorney-in-fact needs to deal with to be able to manage your assets and pay your bills. Older Powers of Attorney may not specifically authorize actions your attorney-in-fact may need to take, such as to access your on-line accounts, deal with cryptocurrency, or sell the second home you recently purchased.

An up-to-date Power of Attorney will avoid the need for a Court to appoint a conservator to handle your financial affairs, which is important if you want to avoid a public court proceeding that will take months and be very costly. Identify someone you trust to handle your financial matters and create an updated Power of Attorney with appropriate powers that will allow them to help you when you need it.

2. Create a Comprehensive List of your Assets and Other Important Information

When we work with clients on settling an estate or trust, one of the most frustrating aspects of the process is their inability to locate information about a deceased’s current assets, debts, or benefits. To make this process easier for your family, create a comprehensive list of your assets including real estate, bank accounts, IRAs, 401(k)s, brokerage accounts, life insurance, annuities and any other assets you have or that your family or estate would be entitled to receive at your death. Include account numbers.

If you have valuable personal property – like artwork, or sports collectibles – provide as much information as you can about the provenance of those items, the purchase price (if applicable), and any trusted source for appraisal or sale of the items after death if that is anticipated. If you have cryptocurrency, provide detailed information about how to access those assets. If you have cash or gold stored at home or offsite, provide information about where to find those assets.

As to any bills you pay on a regular basis – monthly, quarterly, annually – describe from what account each bill is paid if paid automatically. Provide the names of the financial institutions and account numbers for mortgages and car loans.

Include the name and contact information of your attorney, your accountant or tax preparer, your insurance agent and your financial advisor, if any.

In addition to asset information, think about other information that would be useful for your family to have if you were suddenly unavailable, such as:

•  A list of employers from whom you receive, or from whom your beneficiaries may be entitled to receive, pension or other group benefits;
• Information regarding your health insurer, including any Medicare supplement and long-term care insurance policies;
•  A list of your active credit cards, along with any rewards programs;
• Access information for safe deposit boxes or storage facilities;
•  A list of your online accounts, usernames and passwords (more on this below); and,
•  Home alarm codes and contact information for the alarm company.

This is not an exhaustive list but is intended to help you start thinking about what your family would need to know. Pay attention to the tasks you handle for your household and ask yourself, what would someone need to do this?

Make sure a trusted person knows where to locate the list after it is created. And finally, review this list every six months or so and keep it updated.

3. Keep an Updated List of Your Usernames and Passwords

More and more of our life is lived online these days. It is important to leave instructions for those who may need them to access important information that is only accessible online. For example, you may pay all of your bills online or receive account statements via email, you may have online savings accounts that do not exist in a brick and mortar bank, you may have cryptocurrency, or photos stored in an online photo storage site you want family members to be able to access after your death. For all of these reasons and many more, create a list of your username and password for those websites and other online accounts that will be important for someone to access after your death. If you store this information in an online password manager, leave the password for that password manager account. Then, keep this list in a safe place that is known to a trusted person or two who can locate the information when needed. And as with the other lists mentioned above – keep this updated as usernames and passwords change and new online accounts are created.

4. Review and Update your Beneficiary Designations.

Many of your most significant assets – life insurance, retirement accounts, annuities – will be paid to a designated beneficiary at your death. Make sure your beneficiaries are designated properly and consistent with your estate plan. Properly designating 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. Work with your estate planning attorney to be sure you understand how your beneficiaries should be designated, and then confirm they are designated in the appropriate way to ensure your estate plan will work as intended.

After your beneficiaries are designated, it is a good idea to confirm those beneficiary designations from time to time. It is not uncommon that when financial advisors move from one company to another, or when employer-sponsored retirement plans change custodians, the beneficiary designation does not carry over. Requesting written verification of your beneficiaries and maintaining that confirmation with your records is also a good idea.

5. Make sure your assets are properly titled in your Trust.

A Trust is an estate planning tool that is used to accomplish many goals including asset management, probate avoidance and estate tax savings. However, simply creating a Trust will not in itself achieve those goals; it is necessary to “fund” the Trust by titling assets in the name of the Trust or designating the Trust as the beneficiary of assets such as life insurance.

Your estate planning attorney should provide you with instructions for funding your Trust consistent with your estate plan. If you have received trust funding instructions but haven’t yet gotten around to doing the work necessary to retitle your assets or designate beneficiaries properly, take the time to do that now. It will make all the difference in achieving those planning goals.

Maria C. 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 the former President of 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.

November 2024
© 2024 Samuel, Sayward & Baler LLC

In my estate planning practice, I advise my clients about the different documents that make up an estate plan, including Wills and Trusts. Both Wills and Trusts are used to pass assets on to beneficiaries at death. However, there are distinct advantages to using a Trust over a Will. Here are five ways in which a Trust beats a Will.

1. A Trust can be used to Avoid Probate – a Will cannot. Probate is the process of changing the title on assets when someone passes away. Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died. In order for family members to gain access to accounts or other assets in the deceased’s individual name, they must file a petition with the probate court and wait for the court to approve the Will and appoint the Personal Representative. This can be a long and costly process during which bills cannot be paid and assets cannot be managed. A Trust is an excellent probate avoidance tool because assets that are owned in the name of a Trust are immediately accessible to the trust-maker’s designated successor.

2. A Trust can provide Creditor Protection for the Inheritance you Leave to Beneficiaries – a Will cannot. Many people worry that the inheritance they leave to their children will be lost to their children’s creditors such as a divorcing spouse, unpaid credit card bills, a bankruptcy, a business loss, or a lawsuit. Sadly, this is often the case when assets are distributed to beneficiaries via a Will. A Trust allows the maker to safeguard an inheritance from the easy reach of the beneficiaries’ creditors by keeping the assets out of the name of the beneficiary. Ownership of the assets remains in the Trust. The beneficiary will have access to the assets in accordance with the directions you leave in your Trust. You may name your beneficiary to serve as Trustee, allowing the beneficiary to manage her own inheritance. By leaving assets to your beneficiaries via a Trust rather than outright via your Will, you can ensure that the assets you worked so hard for will be available to your children and future generations and will not end up with the beneficiary’s ex-spouse.

3. A Trust can Protect Government Benefits for a Person with Disabilities – a Will cannot. If you have a child, grandchild or other beneficiary with disabilities, then a Trust is a must. If you leave assets to a person who receives needs-based government benefits via your Will, it will place your beneficiary in the difficult position of either losing those benefits, or transferring the inheritance into a Trust of which the state must be the beneficiary at the beneficiary’s death. Unless the inheritance you are leaving is so significant that the monetary and medical benefits available to the person through programs such as Social Security and Medicaid are no longer important, then making sure that those government benefits continue to be available is vital. Leaving assets to a person with disabilities via a Trust is the best way to ensure those government benefits are preserved and that the inheritance you leave will be available to pay for expenses that are not covered by those benefits, which while vital to many, are limited in their scope.

4. A Trust makes it Easier to Manage Assets for an Incapacitated Person – a Will cannot. If a person experiences a period of incapacity during their lifetimes, they will need someone to pay their bills, manage their investments, maybe sell their house, etc. The worst situation to be in should this occur is to have done no estate planning at all. For those with no estate planning in place, family members or another interested party will need to petition the court to be appointed as the Conservator for the incapacitated person in order to obtain authority to manage the assets. This is an expensive, time-consuming, and public process. A basic estate plan will include a durable Power of Attorney which is used to appoint a person to manage one’s affairs in the event of incapacity. A Power of Attorney is a very important estate planning document but it can be difficult for the appointed individual to utilize with banks and other financial institutions which often push back hard on someone attempting to access an account using a Power of Attorney. Banks and other financial institutions do not have the same hostility toward Trust accounts. The successor Trustee of a Trust can easily manage the Trust assets and use them for the benefit of the trust-maker in the event of the trust-maker’s incapacity

5. A Trust can Administer Assets for Minor Beneficiaries without Court Intervention – a Will cannot. Leaving money directly to a minor (under age 18) creates an administrative nightmare because under the law, a minor does not have the legal capacity to receive assets. The parent of the minor does not have the authority to act as the child’s legal representative until the court says so. As such, if you die with a Will that leaves money to minor beneficiaries, or if you name a minor as the beneficiary of your life insurance or IRA, the court will need to appoint a Conservator to receive that inheritance for the minor. The Conservator will be required to report annually to the court and the court will appoint an overseer (guardian ad litem) to make sure the Conservator is doing his or her job for your minor beneficiaries. This means huge costs and long delays in administering funds for minors. It also means that when the minor turns 18, he or she will be entitled to receive all of those assets and will be free to do with them as he or she wishes (think, fast cars, spring break, and lots of shopping). Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary may use the assets only for purposes you decide are important and/or at ages that you dictate.

These are just five of the many ways in which a Trust is superior to a Will. If you want to learn more about whether a Trust is right for you, call us or email us to schedule an appointment with one of our experienced estate planning attorneys.

Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate and Trust settlement and elder law matters. She 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. 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 our website at www.ssbllc.com or call 781/461-1020.

 

September, 2024
© 2024 Samuel, Sayward & Baler LLC