Assets – Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, retirement accounts (IRAs, 401ks), annuities, furniture, jewelry, art, clothing, and collectibles.
Asset Protection – Asset protection is an area of financial planning using techniques designed to keep one’s assets away from certain creditor claims
Attorney-in-fact – The technical legal name for the person appointed to act under a Durable Power of Attorney.
Avoiding Probate – The probate process is different in different states. In Massachusetts, probate is a time-consuming process. All documents filed with the Probate Court are a matter of public record. Probate is typically handled by an attorney, and requires not only the payment of attorney fees, but also Court costs and filing fees. Many people choose to avoid probate by consulting with an estate planning attorney who can advise on some common ways to avoid probate, such as setting up a living trust, owning property jointly, and designating beneficiaries on assets, as appropriate to that person’s situation, assets and goals
Beneficiary – A beneficiary of a trust is the individual or group of individuals who are entitled to receive income or principal from a trust.
Conservator – A person appointed by the court to make financial decisions on behalf of an incapacitated or incompetent person after a court proceeding in which notice is given to the incapacitated person and proof of incapacity is offered and assessed. A conservator stands in a fiduciary position to their ward, and is in charge of marshalling, protecting and managing all of the ward’s assets as well as paying bills and handling the ward’s financial matters.
Credit Shelter Trusts – A Credit Shelter Trust is a type of trust instrument that is often used by affluent couples to reduce the estate taxes due to the federal government and/or the Commonwealth of Massachusetts. A Credit Shelter Trust is funded on the death of the first spouse and the assets in the Credit Shelter Trust pass to the surviving spouse tax free for the benefit of the surviving spouse during his or her lifetime (also see Marital Deduction definition). The trust is not considered part of the surviving spouse’s estate because the surviving spouse gives up control of the funds to a trustee (who is typically the surviving spouse). At the death of the surviving spouse, some estate taxes may be due, and then the remaining assets are distributed to the beneficiaries as instructed in the trust. An estate planning attorney can advise you if a Credit Shelter Trust is the best fit for your estate planning needs.
Distribution – A payment of cash or assets to a beneficiary who is entitled to receive it.
Durable Power of Attorney – A Durable Power of Attorney appoints one or more individuals (the “attorney(s)-in-fact” to act on your behalf with respect to legal and financial matters, and is intended to be used primarily in the event you become incapacitated.
Elder law – Elder law encompasses many areas of the law which impact older adults. Attorneys who practice elder law have the unique ability to advise their clients about a variety of issues faced by their elderly clients and those who wish to assist them.
Estate – In general, assets left by an individual at death. The probate estate consists of assets owned by the deceased in the deceased’s name alone, without a beneficiary or joint owner. The taxable estate consists of all assets in which a deceased person owned an interest at the time of death and subject to federal and/or state estate tax as a result of the deceased’s death.
Estate Planning – Estate planning is the creation of legal documents that contain the creator’s instructions for managing assets upon incapacity and at death, and designating the people who will be charged with carrying out those tasks. A goal of estate planning is often to minimize taxes and expenses associated with the settlement of estates.
Executor / Personal Representative – A Personal Representative is named when a will is drawn up. This person follows the instructions left to them at the time of your death. The Personal Representative disburses assets and pays any taxes or expenses that are due.
Fair Hearing – The official name of the initial proceeding to appeal a denial or other adverse decision made by MassHealth.
Federal Estate Tax – A tax imposed by the U.S. government upon the death of an individual based on the value of all assets in which the individual held an ownership interest, whether solely in their name, jointly with one or more other people, or through a trust.
Fiduciary – A person with a legal obligation (duty) to act primarily for another person’s benefit. Fiduciaries include the Personal Representative (Executor) of an estate, the Trustee of a Trust, and an agent acting under a Power of Attorney.
Grantor/Donor/Settlor – The creator of a trust.
Guardian – A person appointed by the court to make decisions on behalf of an incapacitated or incompetent person after a court proceeding in which notice is given to the incapacitated person and proof of incapacity or incompetence is offered and assessed. A guardian stands in a fiduciary position to their ward, and makes decisions about where the incapacitated person will live, and also has authority to make health care decisions for their ward.
Health Care Agent – The person appointed under a Health Care Proxy to make medical decisions on your behalf if you are unable to do so. The health care agent should consider your health care wishes, moral and religious beliefs, and the advice of the medical professionals when making health care decisions for you.
Health Care Proxy – A health care proxy is a document that appoints a person to make health care decisions for you in the event that you are unable to do so. The person appointed is called a “health care agent”, and you should have the contact information of a primary health care agent and an alternate (back-up) health care agent listed on the health care proxy form. The form must be signed in the presence of two adult, disinterested witnesses.
Incapacity – the inability to manage one’s own affairs and/or make medical decisions for oneself, either temporarily or permanently.
Inheritance – The assets received from someone who has died by the beneficiaries of the deceased’s estate.
Inheritance planning – Inheritance planning is another term for estate planning and may include creating creditor-protected trusts for children or other ultimate beneficiaries to protect their inheritance from the reach of their creditors such as a divorcing spouse, lawsuit, or bankruptcy.
Irrevocable Trust – An irrevocable trust is a trust you set up during your lifetime to distribute your assets after your death. Unlike a “living trust” or “revocable trust,” the terms of the trust cannot be changed by you during your lifetime. Additionally, you may have limited to no access to or control of the trust assets and income. Irrevocable trusts can accomplish a variety of goals such as reducing estate taxes, avoiding probate, shielding assets from a Medicaid/MassHealth claim, and providing privacy and creditor protection. Transferring your assets to an irrevocable trust is a big decision and the advantages and disadvantages should be discussed with your estate planning attorney.
Legacy Planning – Legacy planning is a more deliberate approach to estate planning that involves making careful decisions about how your assets and tangible property will be used to create a beneficial legacy. An estate planning attorney can assist individuals with a strategy for how to pay for grandchildren’s education for example, which can involve using specific kinds of trusts. Legacy planning can involve “giving while living,” to charitable organizations or specific family members who may have certain needs or goals. Legacy planning is a more complex, generational form of estate planning that aims to build a secure financial future for heirs and reduce conflict by distributing property in mindful ways.
Live in dementia care – Live-in caregivers can help persons with dementia to live at home throughout the course of their disease, rather than moving into an assisted living facility, memory care unit, or nursing home facility.
Living Trust – A living trust is an estate planning instrument that holds ownership of your assets during your lifetime and directs the distribution of those assets after your death. It is sometimes also called a “revocable living trust” or a “revocable trust” because you retain the power to revoke or change terms of the trust during your lifetime as the creator (Grantor/Donor/Settlor) of the trust. You are the Trustee and beneficiary during your lifetime. At your death, a successor Trustee administers and distributes the trust assets for your beneficiaries as instructed in the trust. A living trust permits avoidance of the lengthy process of probate, ensures your assets are not made public, and . can be a good way to control and protect the distribution of your assets to your beneficiaries. Your estate planning attorney can advise you on whether a living trust is right for your situation.
Long term care insurance – a type of insurance that helps pay for the cost of long-term care, typically both in a nursing home and at home or in an assisted living facility. Long-term care insurance policies that meet certain minimum criteria determined by MassHealth can protect certain assets from the cost of nursing home care.
Look-Back Period – The period (currently 5 years or 60 months) during which MassHealth has the right to review all financial and asset transactions made by a person applying for MassHealth long-term care benefits and impose a penalty on “disqualifying transfers” (gifts and other transfers of assets for less than their fair market value).
Marital deduction – A deduction that may be taken on the federal and Massachusetts estate tax returns for property passing to a surviving spouse either directly or through a properly structured trust. The marital deduction is currently unlimited with respect to property passing to a surviving spouse who is a U.S. citizen under both federal and Massachusetts law, meaning that property passing to a U.S. citizen spouse is not subject to federal or state estate taxes on the first spouse’s death.
MassHealth – The name of the Massachusetts program encompassing both Medicaid and the Children’s Health Insurance Program. MassHealth offers a range of benefits covering things such as doctors’ visits, prescription drugs, hospital stays, and long-term care services.
Massachusetts Estate Tax – A tax imposed by the Commonwealth of Massachusetts upon the death of an individual based on the value of all assets (with the exception of certain out-of-state property) in which the individual held an ownership interest, whether solely in their name, jointly with one or more other people, or through a trust.
Medicaid – A federal public assistance program providing health care coverage for low income people, including long-term care. Medicaid is a needs-based program, and eligibility is based on income and/or assets, depending on the specific coverage being sought.
Medicare – The federal health insurance program primarily covering Americans aged 65 and older. While Medicare covers many health care services, it does not cover long-term care.
Probate – Probate is the court process necessary to transfer assets belonging to a deceased person to his heirs or beneficiaries. During probate the Court confirms the validity of the deceased’s Will (if any), appoints the Personal Representative (formerly known as Executor) of the estate, who then has the authority to marshal the deceased’s assets, pay debts and taxes, and distribute the remaining assets to the beneficiaries of the estate. If a person dies without a Will the deceased is said to have died “intestate.” In that case the assets will be distributed as provided by the law of the state in which the deceased resided.
Revocable Living Trust – see Living Trust definition.
Revocable Trust – see Living Trust definition.
Settle an estate – The process of winding down the affairs of a deceased person, including identifying and valuing assets, paying debts and taxes, and distributing assets to beneficiaries.
Special Needs Trust – A special needs trust is a special type of trust created for the benefit of a person with special needs. The trust assets are managed for that person by the Trustee of the Trust. If drafted properly, the assets in the Trust will not disqualify the person with special needs from receiving means-tested public benefits, including Medicaid and SSI (Supplemental Security Income). The special needs trust may hold assets belonging to the special needs person, or belonging to a third party who wishes to set aside assets for the benefit of the special needs person (also called a Supplemental Needs Trust).
The SECURE Act – The SECURE Act, or “Setting Every Community Up for Retirement Enhancement” Act, passed in 2019, was a significant overhaul of the nation’s private retirement account system. Some of the changes made in the act include opening up employer-sponsored retirement plans to part-time employees, removing the upper age limit on IRA contributions, and increasing the age at which RMDs (Required Minimum Distributions) begin from 70½ to 72. From an estate planning perspective, the most important change was the elimination of the ability of most beneficiaries of an inherited IRA to take distributions based on their life expectancy. Now, with a few exceptions (most notably, IRAs passing to a surviving spouse), all funds must be distributed from an inherited IRA within 10 years of the date of death of the original account owner. Your estate planning attorney can advise you on updating your estate plan in accordance with the changes.
Trust – A Trust is a fiduciary relationship in which one party, known as the trust creator, settlor or grantor, gives another party, known as the trustee, the responsibility to hold property or assets for the benefit of another party, the beneficiary. A trust should be memorialized in a written document which specifies the trustee’s duties and powers, the trustee’s obligation to the beneficiary, and the beneficiary’s rights to income or principal from the trust. In many estate planning trusts, the trust creator, trustee and beneficiary are the same person.
Trustee – The “manager” of a trust who assumes the fiduciary obligation to administer the trust and its assets according to the terms of the trust and the laws.
Trust Funding – The process of transferring (re-titling) assets to a living trust (a trust created during the creator’s lifetime) or naming the trust as the beneficiary of an asset using a pay-on-death beneficiary designation.
Wills – In general terms, a Will is a legal document that controls the distribution of probate assets after death. A Will is also the document in which the maker names the person who will be charged with administering the probate estate (the Personal Representative, sometimes called Executor) and names someone to serve as guardian for minor children.